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anglo pacific group plc

MIDAS SHARE TIPS: Three havens to shield you from stock market turmoil – gold, oil and a top insurer

Perhaps it had to happen sooner or later. But last week’s rollercoaster ride on the stock market was nerve-jangling, especially so, given predictions that further volatility lies ahead.

Ironically, stronger economic growth in most parts of the world is largely to blame, prompting suggestions that interest rates will rise faster than expected.

That is broadly considered bad news for equities: higher rates make it more expensive for companies to borrow and can encourage investors to buy bonds instead of shares.

The knee-jerk reaction when markets misbehave, is to sell everything and run for cover.

That is rarely the best policy, however. Instead, investors are advised to keep their heads and make sure they own a broad spread of shares in different industries and with different attributes.

Mining firm extracts a wealth of royalties 

Anglo Pacific Group plc (LON:APF) occupies a unique position on the London Stock Exchange, as the only listed business that is focused on mining-related royalties. The company lends money to mining groups, in return for a percentage of their revenues.

Midas recommended the shares in December 2014 when they were 105p. Today, they are 144.5p and should continue to gain ground. The dividends are generous too.

Last week, chief executive Julian Treger said the 2017 dividend would be 7p, putting the stock on a yield of more than 4.5 per cent. The company also reported an almost doubling in royalty income from £19.7 million in 2016 to over £37 million for last year.

Anglo makes most of its money from a longstanding agreement with Rio Tinto, which entitles the group to income from the Kestrel coal mine in Australia. But Treger’s strategy centres on providing finance for a wide range of projects in different parts of the world, covering commodities from uranium to coal. Some are already in production; others are at an earlier stage but most are in stable, well-known mining regions, such as Canada, Australia and Brazil.

Back in 2014, commodity prices were struggling. Today, the outlook is brighter and Anglo Pacific is already promising to increase dividends in 2018.

Midas verdict: Anglo Pacific shareholders have benefited from share price gains and dividend growth over the past four years. That trend should continue. Existing shareholders should hold. New investors could also snap up some stock at 144.5p.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.