The Motley Fool

A near-8% stock yield (and some ETFs) I’d rather buy for March than this 9% yield

Image source: Getty Images.

I recently explained why Sylvania Platinum could be a terrific stock to buy for March. With coronavirus fears spreading and Brexit-related tension also returning, having exposure to safe-haven assets is a great way of protecting your wealth.

Buying up producers of precious metals is a great way to do this, though I understand why some investors might be minded to stay away from Sylvania, given its recent production problems.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

These investors might be happy to wave goodbye to the mining giant’s bulky dividend (close to 8%) and just benefit from rising platinum group metal (PGM) prices instead. And a great way to do this is by buying exchange-traded products (ETFs) that are backed by the physical metal.

Buying Sprott Physical Platinum & Palladium Trust, or the Xtrackers Physical Rhodium ETC are a couple of ways to do this.

Motoring ahead

It’d be a mistake to think PGM-backed investment vehicles are the only great ways to protect yourself in tough times like these. These metals have risen between 100% and 500% in value during the past year, not only on a range of geopolitical and macroeconomic concerns (Brexit, US-Chinese trade wars, flagging eurozone economies). They’ve also boomed because of soaring demand from industrial clients.

More specifically, demand from the automotive sector is ballooning owing to their critical role in catalyst converters. PGMs are built in to reduce emissions and, thanks to growing green legislation (laws that demand more and more loadings of the metals in such components), consumption from the carmakers is growing.

Those aforementioned ETFs (like Sylvania) aren’t just great buys on strong investment and industrial demand though. Supply shortages in the production heartland of South Africa — issues that have certainly bashed Sylvania Platinum of late — threaten to keep PGM prices well supported too. According to Johnson Matthey, platinum supply could fall below 6m ounces for the first time since 2014 this year. It also expects deficits in the rhodium and palladium markets to worsen.

PGMs vs the iron giant

I’d certainly rather buy shares in Sylvania Platinum, or indeed one of those ETFs, than buy into Ferrexpo (LSE: FXPO).

Like the aforementioned PGM producer, this FTSE 250 commodities giant carries a forward yield of around 8%. In fact its 8.3% yield beats Sylvania’s by around half a percentage point. I wouldn’t buy it today though, on long-running fears concerning growing supply in the iron ore market.

The Ukranian miner’s share price has tracked values of the steelmaking ingredient lower in recent sessions. Iron ore has dropped on concerns over how the coronavirus outbreak will smack demand in the immediate term. But I’m also worried about the swathes of new supply scheduled to hit the market in the new decade. A number of new mega-mines are set to start up, and project expansions due for completion all over the globe.

Reflecting these pressures, City analysts expect Ferrexpo’s earnings to drop 44% in 2020 and 25% next year. So forget about that big yield and the company’s low forward P/E multiple of 4.2 times, I think this is a share to avoid at all costs.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.