President and CEO of Southern Copper (PCU), Oscar Gonzalez Rocha, talks about the state of play in the company and the copper sector. "There is still strong demand from Asian countries. We do not believe they are going to slow construction and technological advance, this different to the USA which is semi-paralyzed.......At the same time we have mines which are suffering from reduced mineral grades or are on strike such as at Cananea, and this copper that is not reaching the market makes supply slightly lower than demand. This will maintain prices."
Southern Copper (PCU) is moving up a bit on the strike relief news (the Peru strike is not over by a long way, but the big mines are working for sure). I snagged a few at $101 and will sell them quickly as a splash'n'dash profit. Small scale trade.
Earnings for this company have surpassed Previous Year Actual numbers for the last 6 consecutive quarters. PCU is still a great stock to have in the portfolio.
If you understand the cash cow relationship between PCU and its parent company Grupo Mexico [GMEXICOB.MX], you understand why the dividend policy is so generous. In the chart period (2003 to date), PCU has paid out U$19.64 in dividends. And if you'd bought the stock in January 2003, you would have paid U$15 for the stock.....that's what's called a good deal. Since then the stock has been a star performer, and here's the long term stock performance.
All very impressive. So while copper (and other metals prices) remain high, so will the dividends. And so will the stock price. And this is demonstrated by the U$1.70 dividend that PCU will pay in June 2008 (that's the pink bar on the dividend chart), all through a period of industrial unrest. There's plenty of upside available once the stupidity at Cananea ends. PCU is an example of the best kind of investment advice; simple, logical and with a great track record. You buy a good stock and you hold it. Boring, but it works.