Share investing is a long-term endeavour. And market volatility is a fact of life that one has to endure in order to build a winning stocks portfolio. That’s not to say that investors aren’t entitled to be feeling a little nervous right now, however.
It’s no reason to pull up the drawbridge entirely though. Indeed, it’s a good idea to load up with some safe-haven stocks today to protect yourself from the worst of the washout. Some shares like FTSE 100 gold producer Polymetal International (LSE: POLY) are ones that could actually rise in the event of prolonged social, economic and political uncertainty.
Gold has long been one of the world’s ultimate rush-to-safety assets, and recent estimates from UBS illustrate its broad appeal as an investment option today. Not only did the broker raise its price estimates for 2020 and 2021 to $1,650 and $1,700 per ounce. It predicted that the yellow metal could surge to record peaks of $2,000 in the event of a global Covid-19 pandemic.
Polymetal is, of course, one great way to play the possibility of rising bullion values. Unlike investing in gold itself, investors here can get hold of a dividend. And in this case a very chunky one (the digger carries a 5.7% yield for 2020). Combined with a low forward P/E ratio of 9.8 times I think this mining stock’s a top buy for these testing times.
More BIG yields
I reckon buying shares in Royal Dutch Shell (LSE: RDSB) is a risk too far, however, in spite of its near-12% dividend yield.
Oil prices continue to reverse and as I type, Brent is at $33.60 per barrel, down markedly from just below $60 as recently as three weeks ago. And speculation is mounting that even more painful drops could be in the offing.
Just ask the boffins at energy research business Rystad Energy. They predict that crude prices could fall as low as $20 per barrel inside the next three months following the breakdown of supply negotiations within the OPEC+ group.
Rystad says that the cartel could swamp the market with an extra 1.5m to 2.5m barrels of the black stuff each day, an estimate that apparently reflects “realistic short-term capability.” It adds that “Without OPEC+, the global oil market has lost its regulator and now only market mechanisms can dictate the balance between supply and demand.”
Too much risk
Royal Dutch Shell’s share price has toppled again on Wednesday. It now changes hands below £12.50 per share, levels not seen for exactly 16 years. With the coronavirus spreading and world governments intensifying lockdowns of local populations, it looks as if black gold prices could continue their alarming descent.
This is why I don’t care about Shell’s low share price. At current prices it carries a P/E ratio of 6.5 times and a mighty 11.7% dividend yield too. If you’re looking to get big dividends with commodities companies you’d be much better buying the likes of Polymetal, I think.
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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.