Investing in a successful company can often bring instant results in the form of a regular payment distributed to shareholders.

Most major London-listed firms reward their shareholders in this manner, with the average dividend yield on the FTSE 100 being 4.18% at the time of writing. Some go above and beyond the average. Step forward Persimmon (LSE:PSN).

A juicy dividend

The homebuilder has become renowned for its generous dividend yields, and the yield forecast of 17% for 2022 is no different. However, there is a lot to unpack before I start buying up.

Persimmon’s stock has fallen significantly this year. The 59% collapse could be a sign of a poor-performing company, or an opportunity to invest at a historically low price of around £11.90.

The latest decline in Persimmon’s stock can be attributed to the new chancellor Kwasi Kwarteng’s ‘mini-budget’, which was focused on heavy tax cuts, creating turmoil in the markets and raised fears of higher inflation.

The response by the Bank of England was to affirm a higher interest rate policy if and when required. The likelihood of a higher base rate is already impacting the property market with lenders pulling several mortgage deals this week.

And, as a large-scale housebuilder, Persimmon will suffer if the pound remains near all-time lows, considering its importation of materials. Margins could be trimmed further when factoring in continuing cost inflation.

Stamp duty cut beneficiary?

However, another piece of government policy could positively impact Persimmon’s prospects, and that is the stamp duty cut. This move could encourage first-time buyers with a deposit to consider a bigger home.

Overall, the stamp duty cut should prop up the housing market in the short term at least, insulating Persimmon from the broader economic downturn to an extent.

Now, let’s look at the company’s recent financial performance and consider the impact of that on dividend policy.

Revenue went down by 8% to £1.69bn in the first six months of 2022, but £750m was returned to shareholders by July. Persimmon also expects a busier last six months of the year.

When looking at the dividend coverage metric — the number of times a firm can pay dividends to its shareholders using its net income — Persimmon recorded a ratio of just 1.06 in 2021.

This ratio, plus a potentially weaker overall annual performance, could indicate the company’s dividend yield is unsustainable at the current rate.

However, even if the dividend were to fall by several percent, it would still be extremely attractive, and Persimmon would remain one of the highest dividend-yielding FTSE shares.

Considering all of the factors discussed above, I won’t be hesitating to invest in Persimmon shares at the current low price, not just for the juicy dividend, but also because I can’t see the house market crashing any time soon!

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

All investors wish to secure passive income for their future needs, but many feel they don’t have enough funds to assign for investment to generate significant returns.

I’m here to show investors they don’t need to break the bank to secure a passive income stream in later life. All that’s required is a regular cash commitment and a diversified investment approach.

My £150 a month plan is manageable, yet it equates to a tidy £1,800 a year. Over a decade, this is £21,600. While all investments fluctuate over long periods, it’s not unreasonable to believe that my cash investment will have increased exponentially.

So, how am I building my portfolio to ensure it is diversified and will generate significant long-term returns? I’ll be dividing my funds into the following investment inputs.

ETFs

Exchange traded funds (ETFs) are a collection of shares that trade on an exchange at any given time. Either actively managed or set up to track a broader index, they provide a low-cost way of gaining exposure to a diversified basket of options.

A good example is the popular Stocks and Shares ISA. Data for the 2020/21 tax year showed that the average Stocks and Shares ISA returned 13.55%.

I personally like the Hargreaves Lansdown Stocks and Shares ISA, as it offers a low account management fee of 0.45% and a simple user interface.

Mutual funds

Similar to ETFs, a mutual fund is a compilation of assets operated by a professional money manager. The difference is that mutual funds trade only once a day after the market closes.

Via a mutual fund, investors gain access to a professionally managed portfolio of diversified options, including stocks, bonds and other securities.

Each shareholder in the fund participates proportionally in the gains or losses in any given period. High-performing, large-stock mutual funds have produced returns of up to 12.86% in the last 20 years.

Vanguard is the largest issuer of mutual funds in the world, and this is where I’m allocating some of my £150. The firm offers a range of options such as index funds, Vanguard ESG funds and target retirement funds.

Single line stocks

I also like to invest in individual stocks, chiefly because public companies regularly deliver cash-generating dividends to shareholders.

The highest dividend-yielding company on the FTSE 100 is homebuilder Persimmon at 15%, but the average is around 4%.

When it comes to picking individual stocks, I consider whether the company – and the industry it operates in – is future proof. That means I can reasonably say it will continue to generate revenue in an evolving world.

In that case, National Grid is a good consideration for my portfolio, as we are going to need electricity whatever the future looks like, and it boasts a 4.82% annual dividend yield.

It’s important to note that any of the above could generate losses for me at any given moment, but by creating a regular and diversified investment plan, the potential to generate long-term passive income is greater.

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

While the chances of avoiding a recession seem slim, Truss will be hoping that her premiership can deliver some fiscal stability over the coming years, and something akin to a ‘Boris bounce’ in the short term.

All UK businesses are grappling with an inflation rate running at 10.1% in the 12 months to July, which has contributed to the FTSE All-Share Index falling by 6.85% in the year to date.

But all good investors see opportunities in a market downturn, so I’m taking a closer look at the following UK shares that have taken a tumble in recent times, but the fundamentals remain strong, in my opinion.

Rio Tinto

The stock value of Rio Tinto (LSE:RIO) has fallen by over 10% in the past month, which can probably be attributed to its first half profit return of $8.6bn – a 28% decline on the same period last year.

However, Rio’s record earnings in the first half of 2021 were a result of high commodity prices at the time, especially iron ore, which accounts for almost 90% of the FTSE 100 firm’s earnings.

The iron ore price has halved since then, and impacted Rio’s profit accordingly. But the world’s second largest miner maintained a dividend of $4.3bn — its second highest half-year payout ever — and is looking to diversify its business with investments in cleantech commodities.

On Tuesday, Rio sealed a definitive arrangement to buy out Turquoise Hill Resources – its partner in the Oyu Tolgoi copper mine in Mongolia. The $3.3bn deal gives Rio greater exposure to a commodity of which demand is projected to increase 50% by 2040 as the clean energy transition develops.

ITM Power

Here is another London-listed company that has struggled of late. ITM Power (LSE:ITM) is down 25% in the last month and 54% going back six months. Not pretty reading for current shareholders in the renewable energy firm.

By way of introduction, ITM is focused on building key infrastructure for the nascent green hydrogen industry. The company has a notable partnership with ScottishPower which aims to develop a green hydrogen facility at an onshore wind farm near Glasgow, amongst other projects across Europe.

This net-zero fuel source should be a hit with climate-conscious investors, but that isn’t the case yet considering ITM’s falling share price. Seemingly, energy investors have reverted to funding new streams of traditional fossil fuels as the energy crisis continues to bite.

But taking a long-term view on the market is essential, and with the climate crisis likely to have an increasing impact on our lives, investors will surely pivot to renewable energy options once the crisis abates.

So here we have two companies that have suffered in recent months but are well positioned to take advantage of long-term investment trends.

And if Truss can stop the rot in the UK economy, we might even see Rio and ITM’s prospects brighten sooner than expected.

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

In times like these everyone is looking for bargains when they go shopping, and it’s no different in the investor world. That’s why I’m looking at this penny stock, which is heading up the value curve.

Gensource Potash (LSE:GSP) is a Canadian mineral fertiliser company developing a project in the province of Saskatchewan — one of the world’s leading potash hubs.

Feed the world

So, what is potash and why is it important? Well, potash is a natural fertiliser that contributes to healthy plant growth.

It has become indispensable to crop farmers around the world, and with the global population expected to reach 10 billion in 2050, potash demand is only going one way.

Earlier this year, potash prices more than doubled to $562 per tonne following Russia’s invasion of Ukraine. This is because of Western sanctions on Russia and Belarus, countries that previously supplied 40% of the market.

From this, it’s clear to me that there is immediate and long-term value to be extracted from investing in a vibrant global potash player.

Gensource Potash

A bona fide penny stock currently trading at 22p in London, Gensource has developed a vertically integrated business plan delivering potash direct from its Tugaske project to its offtake customer HELM AG.

Gensource envisions building a series of smaller scale, low-cost production modules. Tugaske in Saskatchewan is the first of those, with estimated operated costs of just CA$85.08 per tonne.

CEO Mike Ferguson recently said that construction of Tugaske will commence later this year, and in June the company and its offtake partner revealed plans to double production to 500,000 tonnes per year in the face of soaring fertiliser prices and constrained supply.

A higher production rate at Tugaske and higher wholesale potash prices implies significantly improved margins compared to the 17.1% post-tax IRR Gensource forecasted at the previous rate of 250,000 tonnes.

The construction period at Tugaske could last up to two years, so I still have plenty of time to invest before the company starts hitting those healthy profitability margins.

But I’ll be doing so sooner rather than later because Gensource won’t be a penny stock forever, in my opinion, given future potash demand projections and the company’s modular growth plan.

Potential downsides

However, one figure in the industry doesn’t think potash prices will stay high for much longer. Last month, Brazil Potash president Adriano Espeschit said prices will ‘normalise’ by 2023 as more supply comes online.

Either way, Gensource is protected from wholesale price volatility via its offtake with HELM. The agreement provides a pricing mechanism tied to the retail price of potash, which historically comes in at a sizeable premium to wholesale pricing.

A final point I’ll be bearing in mind is the escalating cost of energy and how this could negatively impact Gensource’s margins once they start mining from the Tugaske project.

Overall, though, I am going to invest in Gensource while the stock is still cheap, as the growth potential is something I don’t want to miss out on!

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The lithium sector has been one of the few success stories across capital markets this year, with prices for the metal used in electric vehicle (EV) batteries skyrocketing by as much as 580% so far. Lithium stocks have yet to match this remarkable growth, but all that could be to come.

While lithium miners and producers have faced downward pressure due to rising costs and other macroeconomic variables, most analysts in the space refer to a lag between commodity prices and equities. Plus, the long-term dynamics look incredibly positive for lithium developers.

If the International Energy Agency (IEA)’s estimate of over 200m EVs being on the road globally by 2030 is to be believed, then lithium will be required in unthinkably vaster quantities. In fact, the IEA believes lithium demand could increase up to 40 times by 2040.

With this in mind, I’m looking to get in on the market now to leverage this sky-high potential. There are plenty of lithium options on the London market, but I think Atlantic Lithium (LSE:ALL) has one of the most promising growth stories.

Atlantic Lithium

This well-run company is advancing a large-scale hard rock lithium mine through development studies, with the aim of producing Ghana’s first producing lithium mine.

The mineral resource estimate at the Ewoyaa Project has already grown from 21.3 million tonnes to 30.1 million tonnes ahead of a pre-feasibility study (PFS) in Q3, which I will be following closely.

In a December 2021 scoping study, Atlantic estimated a post-tax NPV of $789m and EBITDA of $178m per annum over an initial 11.4-year mine life. But the beauty of Ewoyaa is there is significant upside to grow the resource via drilling.

With an estimated capital expenditure of just $70m, operational expenditure running at $249 per tonne and the payback period lasting less than one year, the economics look highly attractive already. I expect to see a larger resource and even sweeter economics in the upcoming PFS.

The company has been conducting exploration across the property over the past year and will continue to do so with only 13km² of its 560km² tenure portfolio drilled to date.

Atlantic has also received significant backing from a well-known lithium player across the pond. US-based Piedmont Lithium’s $103m investment is helping the company progress through the studies stage and supporting exploration.

Furthermore, Piedmont has agreed to buy 50% of Ewoyaa’s annual lithium production, should certain criterion be met. Given projected future lithium demand, Atlantic should have no issue selling its product, but there’s no harm in securing a trusted buyer now.

It’s important to stress that building mines take time, therefore I’m viewing Atlantic as a long-term investment. Things can go wrong over multi-decade timelines and macroeconomic conditions often dictate the health of smaller mine developers.

But I believe that EVs are part of the clean energy solution, so I will be backing lithium stocks, starting with Atlantic Lithium. If the share price does eventually catch up with the current lithium price, I will be laughing all the way to the bank.

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

So far this year, the FTSE All-Share index has fallen by 3.38%. This might not be cause for great optimism in the best of times, but we are hurtling towards a global recession and it pays to be defensive in this context.

That is according to American billionaire and investment guru, Seth Klarman. The Baupost Group CEO is quoted as saying: “People should be highly sceptical of anyone’s – including their own – ability to predict the future, and instead pursue strategies that can survive whatever may occur.”

A game of survival

So, if it’s a question of survival in an imminent bear market, I will be backing the FTSE over any competing indices over the next 12 to 24 months. That includes the S&P 500, which has bled nearly 14% so far this year.

The composition of the main UK stock market compared to its US counterpart is a key reason for the relatively stable performance of the Footsie this year.

While the London Stock Exchange tends to be home to stocks in mature sectors such as energy, commodities and financials, the New York Stock Exchange has attracted high-risk, high-reward tech firms for several years.

Many of these tech stocks have suffered heavily in light of the US Federal Reserve hiking interest rates to counter sky-high inflation. For example, Facebook parent Meta is down over 50% in 2022 and it recently reported a revenue loss for the first time in its history.

Comparatively, FTSE-listed stocks in the energy and commodity sectors in particular have performed well, with demand for their products continuing to bounce back despite inflationary cost pressures.

Revenge of the old economy

Last week, BP reported Q2 net earnings of $8.45bn, while Shell made $11.5bn in the same period – a case in point for the ‘revenge of the old economy’ theory purported by Goldman Sachs head of commodities research Jeff Currie.

A lack of investment in the mature natural resources market in the post-2008 recovery has led to limited supply growth, hence higher prices today. Factor in increasing energy demand and the result is the extremely healthy balance sheets we see today for those ‘old economy’ companies.

And if Currie’s ‘commodities supercycle’ thematic is to be believed, we are moving into a sustained period of rising demand that could last over a decade.

With a weighting of nearly 40% towards energy, basic materials and consumer staples stocks, I will be investing in the FTSE All-Share to leverage those strong balance sheets and healthy cash flows, as opposed to the tech-heavy S&P 500.

One word of caution – the FTSE 100 fell by 31% in 2008, and the UK economy took more than five years to get back to the size it was before the recession. While the FTSE All-Share seems to be weathering the storm so far, anything is possible in a bear market.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

On Wednesday, British homebuilder and FTSE 100 stalwart Taylor Wimpey (LSE:TW) announced a 16% increase in pre-tax profit to £334.5m for the six months of the 2022 financial year. Taylor Wimpey’s strong performance arrives against a backdrop of an economy teetering on the brink of recession, which just goes to show that the UK property market stays winning in my opinion. Having said that, Taylor Wimpey shares are down approximately 30% so far in 2022, with investors concerned about rising costs, labour shortages and supply chain delays in the construction sector.

But, at the current price of £1.26, I believe this stock is undervalued compared to its historical average, and I’ll be investing in Taylor Wimpey shares for the following reasons.

Recession-proof?

No industry is guaranteed to be recession-proof. But the fundamentals are looking good at the moment for the housing market.

According to statistics from Nationwide Building Society, UK house prices increased by 0.1% month on month in July – making it the 12^th consecutive monthly increase, albeit at a lower rate than previous growth.

Prices are continuing to go up based on strong demand. Taylor Wimpey’s chief executive Jennie Daly thinks so as well: “Demand for our homes remains strong,” she said in Wednesday’s statement.

However, one factor that could impact demand is the imminent disbanding of the UK government’s popular Help to Buy scheme for new builds, which accounted for 36% of Taylor Wimpey’s completions in 2021.

Recognising this potential headwind, the firm stated that there remains good availability of attractively priced mortgages in the market. Until a replacement scheme is devised, however, first-time buyers will likely have to wait longer to sign on the dotted line.

An efficient homebuilder

Taylor Wimpey’s completed homes in the first six months of 2022 came in ahead of guidance at 6,790. This demonstrates an efficient homebuilding operation, given the challenges facing the sector.

In addition, the company said it expects a full-year financial performance towards the top end of current City forecasts, indicating that there could be further positive returns further down the line.

“We continue to expect low single digit year-on-year growth in UK completions for 2022 and our margin guidance remains unchanged,” Taylor Wimpey said.

The board also proposed an interim dividend of 4.62p in yesterday’s statement, which is up 8% on last year and another reason why I’ll be buying up Taylor Wimpey shares.

With a prospective dividend yield of 9.1% for the next 12 months, stockbroker Hargreaves Lansdown argues that there’s more than enough cash flowing through the business to cover its dividend payments.

Investors are also more likely to receive a base level of dividend even in a downturn, due to Taylor Wimpey’s dividend policy linked to asset value, rather than earnings, according to Hargreaves Lansdown.

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Ever since the Fukushima disaster of 2011, nuclear power has become somewhat of a dirty word in discussions on safe, reliable and clean energy among those looking to invest within the FTSE 100.

However, the truth is that nuclear is in fact one of the most efficient and low carbon emitting energy sources out there, and its reputation is only now recovering as the world faces energy shortages in the short term and climate change in the long term.

In the UK, outgoing Prime Minister Boris Johnson announced a new wide-ranging energy strategy in April that called for up to eight new nuclear power stations to be built, in the hope that nuclear can provide 25% of the UK’s electricity demand by 2050.

So, how can I leverage this potentially huge growth market? Here’s some companies I’ll be investing in:

Uranium miners

As the primary feed source in nuclear power facilities, uranium is a pretty essential part of the nuclear energy supply chain. Uranium is found in huge quantities in several key mining regions around the world.

Kazakhstan is the world leader in natural uranium mining, according to Kazatomprom – a mining giant with enterprises through the entire front-end of the nuclear fuel cycle.

However, the world’s biggest uranium miner won’t be found on the FTSE 100 due to it listing only global depository receipts in London.

Instead I will be looking to invest in Footsie stalwarts BHP and Rio Tinto once they update their strategy for uranium.

BHP operates the Olympic Dam in South Australia, which is one of the most significant deposits of uranium on the planet, while Rio had majority owned the Ranger mine in Western Australia until it ceased operations last year.

In recent years both companies have seemed to back away from their uranium businesses, but a renewed global appetite for nuclear energy could tempt them back into the game. Watch this space.

Rolls-Royce in the nuclear business?

Another long-standing FTSE 100 company I’ll be keeping close tabs on is Rolls-Royce, due to its ambition to build a number of new nuclear reactors in the UK.

At the beginning of July, the engineering firm shortlisted six sites for a factory that would build Small Modular Reactors (SMR).

The UK plans to build 16 SMRs to help reach its net-zero target by 2050 and is backing Rolls-Royce to deliver some of these smaller, more efficient nuclear-power sites.

So, with the UK pushing full steam ahead with its nuclear industry, I’ll be allocating capital for the above stocks and more nuclear-leaning investments on the FTSE 100 and beyond.

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Why should I invest in energy stocks now? Well, if you’ve been living under a rock for the past seven months or so, I have some news for you: energy prices are high. And they are about to get higher.

After removing an energy price cap in April, the UK’s energy regulator Ofgem is increasing the price cap by a further 32% in October, meaning consumers can expect bills to be up by 65% on average.

So, what’s behind these sky-high prices? A lot of it is down to supply-and-demand dynamics on the wholesale market. Rising global demand is being met with diminishing supply, particularly after the West’s embargo on Russian energy products as the war in Ukraine continues.

This high-price environment means that there’s a lot of cash sloshing about in the sector, which can be leveraged by smart investment. Here are three energy stocks that could yield strong returns.

BP

This global energy heavyweight should be familiar with investors. Currently occupying third place in the FTSE 100 by market cap, BP (LSE:BP) still makes the majority of its earnings through fossil fuels. Therefore its share price is usually closely linked to oil and gas prices.

After piggybacking on the rising price of oil up until June, BP’s share price has retreated to 373p, which could provide an entry point for me to take advantage of the company’s dividend.

Thanks to a strong earnings performance over the last 12 months, BP has paid out more than $4bn in cash to shareholders, and its projected dividend payout for 2022 is 18.6p. However, this is only a forecast and could be downgraded should oil and gas prices continue on the downward trajectory of recent weeks.

Centrica

British Gas owner Centrica is also benefitting from the high energy prices. The company’s stock is up 18% in the year to date, and it is on course to deliver revenue over $20bn and earnings of 7.28p this year, according to analysts.

This bodes well for the company’s prospects as an investment opportunity. Currently at 87p, Centrica stock looks decent value given its healthy financial outlook and the fact that Barclays analysts set a price target of 112p in April. 

Potential headwinds for Centrica in the coming months include commodity price volatility, wider economic uncertainty and supply chain disruption. The group expects these will offset underlying operational progress in the near term.

Greencoat UK Wind

As soaring summer temperatures remind us of the dangers of climate change, renewable energy stocks will certainly come to the fore in discussions on energy investments.

Greencoat UK Wind is one such stock, which operates 43 onshore and offshore wind farms, with a combined generation capacity of more than 1.4 gigawatts. A revenue increase of 172.5% to 423.47mn and a 5% dividend last year demonstrates a strong basis for further growth.

However, the company’s upcoming profits could be impacted by a mooted windfall tax on all electricity generators in the UK. This kind of speculation has hit Greencoat’s share price in the recent past, although I still believe this is a solid future-facing investment.

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Jacob Ambrose Willson has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The post-Covid boom in demand for industrial metals seems to have dissipated in the past few months, to the detriment of a host of FTSE 350 mining stocks, including Anglo American (LSE:AAL).

The diversified global mining giant has seen its share price collapse by 22.95% in the last month, and 12.45% in the year to date, as central banks turn increasingly hawkish to counter ballooning inflation, particularly in energy markets where costs are soaring due in part to the war in Ukraine.

Holding out hope for Anglo

Despite the bearish shift in the mining industry of late, it would be wise to factor in long-term structural demand trends for the mined materials that will be key to powering the net-zero economy.

Anglo American produces a number of these strategically important minerals and metals, including copper, platinum group metals (PGMs), nickel and manganese, in addition to a staple of traditional metals like coal, iron ore and gold.

Since taking the reins from long-standing chief executive Mark Cutifani late last year, Duncan Wanblad has pledged to make further investments in projects targeting the above-mentioned critical minerals and deliver company-wide carbon neutrality by 2040.

The signs looked good earlier in the year, when Anglo posted record full-year earnings for 2021 and bumped up shareholder payouts to total $6.2bn for the year.

However, weak Q1 production figures and darkening projections for the global economy have dented investor confidence in Anglo and its mining peers on the London market.

While the prospect of a worldwide recession could certainly impact demand for industrial metals, particularly in ‘key commodities’-consuming China, this slowing demand picture is tempered by the world’s need to electrify major areas of the global economy – and fast.

Well positioned for the copper boom

Take copper for example. The red metal is required in significantly greater quantities in the making of an electric vehicle (EV), as opposed to an internal combustion engine car.

And with the majority of car-manufacturing companies now putting all of their eggs in the EV basket, the demand story for copper looks very rosy. This is without even considering soaring copper demand from the renewable energy sector.

In June, Anglo started commissioning its vast Quellaveco copper mine in Peru – a $5.3bn project that will produce 300,000 tonnes of copper per year for the first 10 years at full production.

And earlier this week, Anglo reported first production of copper concentrate from the sizeable project, which was delivered on time and on budget.

Having held a small shareholding in Anglo for several years, I will be looking to increase my stock position during the current dip, based on Anglo’s delivery of Quellaveco and its diversified commodity portfolio, which could prove to be a rewarding endeavour in the long term.

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Jacob Ambrose Willson owns shares in Anglo American. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.