Silver stocks operate in a highly cyclical industry. Profits for mining companies are reliant on high precious metals prices. During times of rising precious metals prices, this results in a massive windfall.
But the opposite is also true–lower precious metals prices can cause mining companies to post losses. As a result, income investors looking for stable cash flow and reliable dividends need to tread carefully.
Wheaton is the largest metal streaming company in the world. Streaming means that the company purchases the right to buy silver and gold at a low fixed cost instead of outright mine ownership. It has 24 operating mines and another 8 development projects around the world.
Wheaton’s earnings-per-share performance has been quite volatile over the last decade. Due to its business model, Wheaton doesn’t control how much gold or silver is mined from a specific location nor does the company have control over the market prices for the precious metals.