As I covered on Friday, not every bargain stock is a stock to buy.
We have to be discerning with our capital. Invest only in companies with strong revenues, wide profit margins, and, most importantly, large dividend yields. Profits may be hard to come by in a recession, but we should never pass up an opportunity to earn passive income.
Today’s company, one of my all-time favorites, checks all the boxes – $60 billion in revenue, 30% profit margin, and a 13% dividend yield pulled from $18 billion in profits available to common shareholders. I recommend you buy in today before the stock’s value rebounds.
What’s hot and will get hotter and hotter? Commodities.
For your $100 today, I want you to own on the big dogs – my favorite commodity in this space – Rio Tinto Group (RIO).
I absolutely love it. It’s a giant company based out of London since the 1800s. Incredibly profitable. RIO has over $60 billion in revenue and a profit margin just a shade under 30%. The net income available to common shareholders – my favorite metric, as far as profitability is concerned since that is how they pay their dividends – amounts to $17.93 billion.
That’s unbelievable. It takes 73% of its profits and use that to pay its shareholders a dividend. Right now, on shares that cost around $60 each, RIO is providing a dividend yield of 13%. This company pays you 13% a year to hang onto the stock.
And it is on sale.
RIO is currently trading around $60, down from $95 back in May of 2020 – but it is going back up. Don’t wait for the price to climb higher. We could see a 50% return or more on this investment within two years and you will be paid a 13$ dividend for each of those years.
This is the kind of company you want to own. This is the kind of company you have to have in an inflationary environment because they are one of the largest miners in the world. Everything from iron ore, salt, copper, gold, and – yes – aluminum. They also have smelters, refineries… They do it all, people, and are incredibly profitable while they do it.
So, today, for your $100 dollar I suggest you invest in Rio Tinto Group (RIO) and collect your 13% a year – and take it to the bank.
Catch you guys next week.
— Shah
Source: Total Wealth