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Hunting BIG dividends? I’d buy this 4.8% FTSE 100 yield and hold for 10 years

Looking to get exposure to commodity markets? Big yielders such as oil major BP or iron ore giant Rio Tinto might look mighty tempting.

I’d argue that buying shares in Polymetal International (LSE: POLY) would be a much better raw materials stock to load up on. The FTSE 100’s only dedicated gold miner has jumped 50% in value over the past 12 months.

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However, tension over the geopolitical and macroeconomic backdrop, allied with expectations that central bank policy will be loosened further, remains high. And the tragic coronavirus outbreak has added to market jitters.

Gold’s value has retreated more recently from early January’s seven-year highs of around $1,600 per ounce. It was last trading at $1,565. But those drivers of the safe-haven bullion price are still in place and another move to fresh peaks could be just around the corner.

Top assets to come on-line

Buying Polymetal is a great way to get exposure to the yellow metal. Investor appetite for the digger certainly remains strong, its share price hitting record highs just shy of £13 this week. But the Russia-focused company isn’t just a great play on the possibility of another upswing in gold prices. I also like the impressive progress it’s making operationally.

Blockbuster output from its flagship Kyzyl mine helped annual gold equivalent production rise 3% to 1.61m ounces. Bullion production will remain flat in 2020 and 2021, it says. But growth will move skywards again from 2022 once its Nezhda mine starts producing late next year.

Nezhda — which is 100% owned by Polymetal — is Russia’s fourth-largest gold deposit with an expected life of around 25 years. Development here remains on schedule, as does the execution of the company’s Amursk POX-2 processing centre. This is due to come on-line in the latter part of 2023, will be able to process up to 300,000 tonnes of gold concentrate per year from the company’s assets, and will significantly reduce costs and boost recovery rates.

Buy today, hold until 2030

Fresh news today reminded me of Polymetal’s exceptional production possibilities. New geological studies at its Kutyn asset has seen it double its gold reserve estimates to some 800,000 ounces.

According to chief executive Vitaly Nesis: “The new reserve estimate significantly enhances the value of Kutyn for a potential acquirer or partner.” He said that the company continues “to evaluate various strategic options” for Kutyn and that it plans to announce news of a transaction during the second half of 2020. The mine was previously marked for sale, or as a possible joint venture target, owing to its small size versus Polymetal’s other monster assets.

Investing in mining shares can be considered a risky business. Exploration studies can disappoint. Production outages can happen for a wide variety of reasons. Costs can spiral. However, the news flow out of Polymetal continues to impress and its long-term growth outlook remains quite brilliant.

It’s expected to record a 31% earnings rise in 2020 alone. And at current prices it carries a rock-bottom forward P/E ratio of 10.9 times and a corresponding dividend yield of 4.7%. This is a blue-chip I’d be happy to buy today and hold for the rest of the decade.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.