Finding the best shares to buy is no easy feat. There are a lot of different aspects to consider. One of the things I look for is stocks that provide consistent and stable returns via dividend payments to boost my passive income stream. One stock I like the look of is Antofagasta (LSE:ANTO). Here’s why I would buy the shares for my holdings.
As a quick introduction, Antofagasta is one of the largest copper mining businesses in the world. Based in Chile, it has three main assets in the country and splits its business into three segments which are mining, transport, and water.
So what’s happening with Antofagasta shares currently? Well, as I write, they’re trading for 1,176p. At this time last year, the stock was trading for 1,413p, which equates to a 16% drop over a 12-month period.
The best shares to buy have risks too
It is a well-known fact that commodities are volatile, as is the market as a whole. Price and demand are often intrinsically linked to the state of the world economy. Uncertainty can cause demand and price to fluctuate. Furthermore, the price of commodities can have a material impact on investor sentiment, performance, and any returns too. This is something I must be wary of regarding Antofagasta shares.
Next, Antofagasta shares look a great option to boost my passive income stream but it is worth noting that dividends are never guaranteed. They can be cancelled at the discretion of the business at any time. This often happens to help conserve cash in times of uncertainty or in the face of extreme events such as a pandemic for example.
The bull case
So to the positives then. Firstly, Antofagasta’s position in the copper mining market as well as the current demand for copper are positives. Demand for metal is climbing and it is a key component in building as well as many other applications throughout the world in a multitude of industries. As one of the largest companies in this sector, Antofagasta should benefit and see a boost in its performance and returns.
So let’s take a look at some fundamentals then. I am buoyed by Antofagasta’s track record of performance, although I am aware that past performance is not a guarantee of the future. Looking back, I can see that it has grown revenue and gross profit for the past four years in a row.
Next, Antofagasta shares’ current dividend yield stands at a very enticing 10%. This is substantially higher than the FTSE 100 average of 3%-4%. Furthermore, the shares look great value for money on a price-to-earnings ratio of just 10. The general rule of thumb is that shares that trade on a ratio of below 15 could represent good value for money.
Overall, I believe Antofagasta is one of the best shares I could buy to boost returns through dividend payments. I would add the shares to my holdings to do just that.