Metals giant

Investing in UK mining shares such as Central Asia Metals (LSE: CAML) can be risky business. Demand for their product can be highly cyclical so profits can sink when economic conditions worsen.

At the moment too, the near-term outlook is less that encouraging as China’s economy worsens. The Asian powerhouse is the world’s primary commodity market and sucks up around half of all copper shipments alone.

In a worrying omen, analysts at UBS have slashed their Chinese GDP forecasts in recent hours. They now expect growth of just 2.7% in 2022, down from a previous estimate of 3%. And a 5.4% prediction for 2023 has been slashed to 4.6% for 2023.

A clever dip buy?

Yet I believe the low valuations of many mining shares (including Central Asia Metals) reflects this troubled landscape. Today, this particular share trades on a forward price-to-earnings (P/E) ratio of just 5.6 times.

Central Asia Metals’ share price has sunk 12% in 2022. And as a long-term investor, I think this represents an attractive dip buying opportunity.

You see I expect demand for the company’s products to soar as the transition towards green technologies accelerates. This will likely lead to a sharp share price recovery from current levels.

I think sales of the copper it digs out in Kazakhstan will soar as manufacturing of electric vehicles (EVs) and related infrastructure increases. Meanwhile, consumption of the lead and zinc it produces in North Macedonia will step up as EV battery-building lifts off.

Another top mining stock

For the same reason I think Sylvania Platinum (LSE: SLP) could be a top buy. The platinum group metals (PGMs) it digs for also play a critical role in the fight against climate change.

The main industrial use of these commodities is in the manufacture of catalytic converters in cars and trucks. Legislative changes across the globe mean they are needed in increasingly large quantities to filter out harmful emissions.

However, platinum is also an important material in the production of green hydrogen. The World Platinum Investment Council reckons this role alone could boost platinum demand by a whopping 600,000 ounces over the next decade.

Big dividends

South Africa-focused Sylvania faces the same problems caused by China’s cooling economy. It also faces particular danger as interest rates soar to curb inflation. PGMs are also safe-haven investment metals that can fall in price when central banks tighten policy.

But like Central Asia Metals, I think this threat is reflected by the company’s low valuation. In fact Sylvania trades on an even-lower forward P/E ratio of 4.3 times.

Today, Sylvania boasts a big dividend yield of 6.7% for 2022. Furthermore, Central Asia Metals’ yield sits at a mighty 7.9%. I think both of these income shares are too good — and too cheap — to miss.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

NextEnergy Solar Fund  

What it does: NextEnergy Solar Fund has invested in more than 100 solar power assets spanning the UK and Italy.

By Royston Wild. Renewable energy stock NextEnergy Solar Fund (LSE: NESF) hasn’t been listed on the London Stock Exchange for a considerable period of time. 

But since its IPO in 2014 it’s shown the hallmarks of a true Dividend Aristocrat. It’s lifted shareholder payments each year since then. Last year it raised the full-year reward 2% year-on-year to 7.16p per share. 

I think it’s a great stock to buy for reliable dividend growth. Electricity is of course an essential commodity today, so demand for power sourced from NextEnergy’s assets should remain strong at all points of the economic cycle. This gives added strength for a business seeking to increase dividends over the long term. 

I think NextEnergy’s focus on green energy gives it the edge over other electricity-producers, too. This is a highly lucrative industry as the transition away from fossil fuels heats up. Though remember that it’s also one where corporate profits can suffer during cloudy weather when energy generation can slump.

Today, this renewable energy income stock carries a 6.4% forward dividend yield.  

Royston Wild does not own shares in NextEnergy Solar Fund. 

Central Asia Metals

What it does: Central Asia Metals is an AIM-listed copper, zinc and lead production and exploration company, with operations in Kazakhstan and North Macedonia

By Paul Summers. With UK inflation poised to hit a staggering 18% next year as energy prices soar (again), I’m attracted to the dividends on offer from miner Central Asia Metals (LSE: CAML). A yield of 8.2% at the time of writing won’t be enough to offset the pain ahead but it certainly isn’t to be sniffed at. What’s more, this payout looks set to be covered twice by profit according to analysts.

Naturally, nothing is a given. Metal prices are notoriously volatile, making the near-term earnings outlook distinctly foggy for any company operating in this space. Nevertheless, the likely huge demand for copper going forward as the renewable energy revolution steps up a gear could prove a boon to this AIM-listed firm.

The income stock also appears very reasonably priced compared to sector peers, at just six times earnings. 

Paul Summers has no position in Central Asia Metals

Lloyds Banking Group

What it does: Lloyds is one of the UK’s largest financial services providers and currently the largest mortgage lender in the country.

By Dylan Hood. On the whole, rising interest rates are bad news for stock markets. However, one sector that tends to be robust during these times are banks. This is because as rates rise, they can charge more on their loans to customers. Although Lloyds (LSE:LLOY) shares are down 11% year to date, I think they could be a solid buy for my portfolio.

Firstly, they have a comfortable 4.8% dividend yield. This is comfortably above the FTSE 100 average yield of 3.9%. With inflation on the rise, reaching 10.1% in July, passive income is a great shield for my portfolio. In addition to this, currently trading at 44p, Lloyds shares have a cheap looking 7.3 price to earnings ratio. This is well below competitors HSBC and NatWest who both trade on P/E ratios of just under 10.

So, with a low valuation, meaty dividend, and favourable lending outlook, I think Lloyds shares could be a great buy for my portfolio for September.

Dylan Hood does not own shares in Lloyds

St. James’s Place

What it does: St. James’s Place is a leading provider of financial planning and wealth management services in the UK.

By Edward Sheldon, CFA. My top income stock for September is St. James’s Place (LSE: STJ). It’s forecast to pay out a dividend of 55p per share for 2022, which equates to a yield of nearly 5% at present.

One reason I’m bullish on St. James’s Place right now is that the financial environment is rather complex. High inflation, rising interest rates, stock market volatility, and falling bond prices all present challenges for those looking to save and invest for their future. This should play into the wealth manager’s hands. In this environment, its advisers can add value for clients, and help them stay on track.

Another reason is that the company is raising its dividend. For the first half of 2022, the company declared a payout of 15.59p per share, up 35% year on year.

It’s worth pointing out that if global stock markets continue to fall, the company’s profits could take a hit.

With the stock currently well below its 52-week highs, however, I think a lot of this risk is already priced in.

Edward Sheldon has no position in St. James’s Place.

Greencoat UK Wind

What it does: Greencoat owns a collection of wind farms scattered across the UK, generating clean electricity to power the nation’s homes.

By Zaven Boyrazian. With gas prices sending energy bills through the roof, alternative renewable energy solutions are rising in demand. Today only around 29% of electricity generated in the UK originates from renewable energy sources. But that’s considerably higher than 5% in 2012.

This continued shift away from fossil fuels has created lucrative opportunities for companies like Greencoat UK Wind (LSE:UKW). The business owns a portfolio of on- and off-shore wind farms that generate clean electricity.

Being a wind energy business, its revenue stream and earnings can be quite lumpy. Not to mention the regulatory energy price caps eliminate any form of pricing power.

But with operating margins well above 90%, any reduction in price caps is unlikely to compromise this business, I feel. And with most of the proceeds returned to shareholders in an inflation-adjusted dividend, Greencoat looks like an excellent income stock to own in my eyes.

Zaven Boyrazian owns shares in Greencoat UK Wind

Legal & General  

What it does: Legal & General is one of the UK’s largest financial and insurance firms with a focus on four key areas. 

By Charlie Keough. My top British income stock for September is Legal & General (LSE: LGEN]. With its share price taking a hit this year, this has pushed the stock’s dividend up to an attractive yield of around 9%.  

What I also like about L&G is the long-term dividend plan it set out back in 2020. This was part of a wider five-year ambitions programme. And within this, it has targeted a cumulative dividend ambition of £5.6bn-£5.9bn by 2024. In its latest update, it highlighted it was on track to achieve this.  

The firm has also managed to grow its cash levels since last year, which gives this dividend programme a platform to build up.  

The business may see investors batten down the hatches in the months ahead. And this will likely dent revenue. 

However, with inflation continuing to rise, I think this source of passive income could prove valuable in the months and years ahead. 

Charlie Keough does not own shares in Legal & General 

Lloyds

What it does: Lloyds is one of Britain’s biggest financial institutions. Its brands include Lloyds itself, Halifax, and Bank of Scotland. It earns the bulk of its revenue from mortgage loans.

By John Choong. According to analysts, inflation is now expected to peak at 18% in January. With interest rates still lagging behind inflation, the Bank of England will have to continue raising rates. Given that Lloyds (LSE: LLOY) earns its income from the difference in the cost of borrowing and lending, I expect its earnings to continue upwards; and with that, its dividends.

Although house prices are expected to decline in the near future, I hold the view that the increase in mortgage rates should offset any decreases in property valuations. Furthermore, with an excellent balance sheet, Lloyds doesn’t need to increase its savings rate to bring in more cash, thus allowing it to increase its profits.

So, with a low price-to-earnings (P/E) ratio of 7, and a price target of £0.64, I think Lloyds shares are an excellent pick as a defensive position for my portfolio. And what’s most lucrative is its dividend yield of 4.8%, which is expected to increase along with its margins.

John Choong has positions in Lloyds.

Persimmon

What it does: Persimmon is a housebuilder focussed on the UK market.

By Christopher Ruane. Some of the yields currently on offer in the London market are hard to get my head around. Take housebuilder Persimmon (LSE: PSN) for example. Its dividend yield is almost 16%. For a FTSE 100 member, that is unusually high.

Clearly many investors doubt that the company can sustain its payout and have pushed the share price down accordingly. Although the housing market still looks fairly strong, there is undoubtedly a risk that higher interest rates and a worsening economy could push down selling prices at some point. Persimmon raised its average selling price in the first half, although volumes slipped. It continues to have a healthily profitable business model.

With its thin cover, the dividend looks vulnerable in a downturn. But even if it was halved, it would still be almost 8%. Recognising the risk, I am tempted to add this income stock to my portfolio.

Christopher Ruane does not own shares in Persimmon.

Forterra

What it does: the company manufactures building products from clay and concrete. These include bricks, blocks, and paving.

By Stephen Wright. I think that Forterra (LSE:FORT) is a really interesting income stock. At current prices, it has a dividend yield of around 4.2%.

The company makes the ubiquitous London Brick, which has been used in around 25% of the UK’s housing. This is significant because it means that Forterra’s products are likely to be used in extension projects on those buildings.

It’s natural to think that bricks are something of a commodity, but this isn’t true. Forterra has shown an ability to increase prices to its customers, which indicates that its products are differentiated from those of its competitors.

I also believe that the stock is cheap. Forterra’s share price implies a price-to-earnings (P/E) ratio of around 10 and the company has more cash than debt. This makes it look to me like a strong business at a good price.

Stephen Wright does not own shares in Forterra.

National Grid

What it does: National Grid is an energy company, operating in the UK and eastern US. It provides both electricity and gas.

By Andrew Woods. The National Grid (LSE:NG) share price has fallen just 3% in the past three months. For the year ended March, the firm paid a dividend of 50.97p per share. At current levels, this constitutes a dividend yield of 4.49%. As such, it’s my income stock for September.

The company reported a 107% rise in pre-tax profit, totalling £3.4bn, for the 12 months to March. Furthermore, its dividend payment was 3.7% greater than in 2021. Much of this was down to higher electricity transmission as energy costs spiralled following the pandemic and the war in Ukraine.

One concern, however, is that profit margins may be tighter in the coming months. This could be due to the higher cost of securing energy sources, like natural gas.

Despite this, the business has operating cash flow of £5.3bn, and this may allow the company to engage in controlled expansion of its operations within the UK and abroad.

Andrew Woods has no position in National Grid.

Vodafone

What it does: Vodafone is a leading European mobile and broadband operator. In Africa, it runs mobile and payment services.

By Roland Head. My top dividend share pick is Vodafone Group (LSE: VOD). This well-known telecoms operator offers a 6.5% dividend yield and an improving outlook.

Vodafone’s latest trading update showed growth in Europe and continued expansion in Africa, where the company now has 186m mobile customers.

Currently, fewer than half of Vodafone’s African customers use mobile data or the group’s M-Pesa mobile money service. However, I expect the number of people using these higher-value services to continue rising, supporting long-term growth.

The main challenge the company faces in Europe is strong competition in mature markets. This has caused growth to slow in recent years.

However, changes are underway to increase network utilisation. Cost savings should also come as Vodafone gradually switches off its 3G services.

In the meantime, profit margins are improving, and cash generation remains good. This should support the dividend. I see Vodafone as a dividend buy in September.

Roland Head does not own shares in Vodafone.

This guide will describe what copper mining stocks are, the pros and cons of investing in the copper industry, and which are the UK’s top copper stocks to invest in.

What are copper stocks?

A copper stock is a mining company in the materials sector that generates either all or a large proportion of its earnings from getting physical copper out of the ground.

The world’s largest copper companies participate in all stages of the process. They’re responsible for:

• Exploration and drilling activities to find copper resources
• Developing copper mines if they deem a resource to be commercially viable
• Building the related infrastructure
• Producing the metal in massive quantities

Colossal amounts of copper are used every year. In fact, copper is the third-most consumed metal on the planet (behind iron ore and aluminium). This is because of its exceptional versatility and its consequent use in a wide range of applications.

Copper has extensive uses in a variety of industries including construction, transportation, utilities, machinery, and consumer electronics. As a result, it’s known as a bellwether metal — it can be used to measure the health of the global economy. This is why copper is often referred to as ‘Doctor Copper.’

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Top copper stocks in the UK

Here are some of the largest copper producers on the London Stock Exchange today (by market capitalisation).

Glencore

Glencore is a multinational commodities company that produces raw materials and markets commodities to consumers. It has considerable exposure to the copper market and in 2021 produced more copper than any other UK copper company.

Glencore has interests in copper assets that span the globe. It has mines, smelters, and refineries in Chile, Peru, Canada, Australia, the Democratic Republic of Congo, and The Philippines. 

In total, the FTSE 100 business generated 37% of adjusted earnings from these copper projects in 2021, meaning it makes more money from copper than from any other single commodity.

Despite this, Glencore’s total copper output slipped 5% in 2021 to 1.2m tonnes. Selling its stake in the Mopani project in Zambia caused most of the decline.

However, this was still enough to put the copper stock in third place on the list of the world’s biggest red metal producers. Glencore also devoted around $1.92bn on capital expenditure at its copper business in 2021. This was $422m more than it spent a year earlier.

Glencore salvages scrap copper through its recycling division too. And it fulfils the role of ‘middleman’ between copper producers and consumers through its marketing unit.

Antofagasta

Antofagasta is the UK’s largest dedicated copper mining company and, like Glencore, trades on the FTSE 100. Due to lower grades and water supply issues, output here slipped 2% year-on-year in 2021 to 721,500 tonnes.

Antofagasta has sizeable stakes in four copper producing assets in Chile, the world’s largest copper-producing country. These include the sizeable Los Pelambres and Centinela projects which collectively account for 90% of group output.

Antofagasta is investing heavily to boost copper production and mine life at Los Pelambres and to increase output at Centinela. The copper stock is also undertaking exploration activity in Chile, Peru, Canada, and the United States.

Central Asia Metals

Central Asia Metals is a base metals miner that in 2021 generated three-quarters of EBITDA from its Kounrad copper asset in Kazakhstan. The remainder came from its Sasa mine in North Macedonia, where it produces lead, zinc, and silver.

Central Asia Metals has been pulling copper out of Kounrad for the last decade, an asset whose mine life stretches out to 2034. The Kazakh resource may hold 126,000 tonnes of recoverable copper.

Total production at Central Asia Metals rose 1% year-on-year in 2021 to 14,041 tonnes. Central Asia Metals has expanded the Kounrad mine twice, and is now focussing capital expenditure on the Sasa lead-zinc project. 

Are copper mining companies sensitive to the economy?

Copper is an extremely economically sensitive metal, so prices can move up and down wildly according to broader industrial conditions. As a result, copper mining companies’ profits (and share prices) are also highly geared towards the broader macroeconomic landscape.

However, earnings of copper stocks aren’t just affected by the health of the global economy. Classic supply and demand conditions also influence commodity prices. So even if copper consumption is rising as economic conditions improve, the copper price might not shoot up. A glut of new supply or expectations of rising global production could keep prices subdued.

Conversely, we could see higher copper prices even during periods of no or low economic growth if, say, copper production in key mines or regions (such as in Chile following a fresh labour dispute) comes under pressure.

Is copper a good investment?

With the way the demand for copper is increasing based on the world’s lean towards going green, copper producers could be a great investment for UK investors. Based on current ecological policies, the International Energy Agency thinks annual copper consumption will rise from 24m tonnes in 2020 to 28.6m tonnes in 2030.

Copper stocks are popular investments for investors who are looking to make money from rising demand for electric vehicles (EVs). Due to the metal’s excellent electrical conductivity, it is an essential material in building the vehicles themselves as well as charging infrastructure.

Copper consumption is also tipped to rocket as investment in renewable energy increases and the rate of emerging market urbanisation grows. 

Some analysts even believe that copper supply could fail to keep up with rapid demand increases. Researchers at Rystad Energy, for example, think a market deficit of 6m tonnes will emerge by the end of the decade.

However, copper stocks that manage to overcome these problems could stand to profit significantly over the next decade as copper shortages drive up prices.

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However, things aren’t quite as bright as they appear on the surface. The deteriorating economic landscape means that many of these high-yielding shares will in fact struggle to meet City dividend forecasts.

There are ways that investors can protect themselves, however. This includes finding stocks to buy whose operations remain highly profitable even when economic conditions deteriorate. Finding shares with cash-rich balance sheets and decent dividend cover is another way to avoid dividend disappointment.

2 dividend stocks to buy today

With this in mind, here are two high dividend stocks I’d happily invest my own cash in today.

#1: Topps Tiles

The forward dividend yield at Topps Tiles (LSE: TPT) sits at a market-beating 8%. Its declining share price also means the business trades on a rock-bottom P/E ratio of 6.2 times.

Topps’ share price has collapsed as investors worry about the impact of high inflation on the retailer’s sales. But, so far, the business has remained resilient to these pressures. Latest financials this month showed like-for-like sales up 2.9% in the 13 weeks to 2 July, in line with forecasts.

I’d buy the building products specialist to capitalise on the UK’s bright housing market. I expect sales of its products to remain strong as housebuilding picks up and DIY spending remains robust.

I’d also buy Topps Tiles because of the encouraging steps its taking to build market share. The business hopes to achieve a 20% share by 2025.

Let’s get back to this year’s projected dividend. At 3p per share, it is covered 2 times by predicted earnings, bang on the widely regarded security benchmark. Topps’ strong balance sheet also boosts its ability to pay big dividends (cash and cash equivalents stood at £13.4m as of April).

#2: Central Asia Metals

Like Topps Tiles, commodities producer Central Asia Metals (LSE: CAML) also offers excellent all-round value. As well as providing an 8.2% dividend yield, the firm trades on a P/E multiple of just 5.7 times.

Central Asia Metals is involved in copper, lead and zinc production in Kazakhstan and North Macedonia. And its share price has dropped sharply amid fears over the global economy and falling base metal prices.

I think this provides a great dip-buying opportunity though. I think the copper stock’s share price will rebound sharply when economic conditions recover. I’d also buy Central Asia Metals as demand for its metals from fast-growing industries like electric vehicles and renewable energy looks set to soar.

This year’s projected 18.7p per share dividend is covered 2.2 times by expected earnings. It has also seen a significant uptick in its balance sheet and enjoyed record free cash flow in 2021. I’d buy this high dividend stock today and look to hold it for years.

Buffett’s methods: compounding and value

Much of Warren Buffett’s investment philosophy is based on compounding. Specifically, he looks closely at compound annual earnings growth. It essentially tells me the constant rate of return over a given period.

Taking a look at some of Buffett’s biggest holdings, it’s easy to see how central compounding is to his investment analysis. McDonald’s, for instance, had a compound annual earnings per share (EPS) growth rate of 9.5% between 2017 and 2021. It’s a way to gauge profitability and also a good strategy for understanding the speed at which growth is taking place.

Buffett also likes getting a bargain and for this he looks at price-to-earnings (P/E) ratios. To calculate these, all that’s required is to divide the share price by earnings. This would provide the trailing P/E ratio. For forward P/E ratios, I divide the share price by forecast earnings.

A top quality growth stock

These methods lead me to AIM 100 constituent Central Asia Metals. The company – a base metals miner in Kazakhstan and North Macedonia – recently hiked its dividend in 2021 to 20p per share, from 14p in 2020.

Between 2017 and 2021, EPS rose from ¢29.08 to ¢47.69. Using the principle of compound earnings growth, I calculate that the firm has a compound annual EPS growth rate of 10.39% over a five-year period. This is strong, consistent, and a rate I’d be happy with. 

Despite this, I’m always aware that this earnings record isn’t guaranteed in the future.

Over this same period, the business more than doubled pre-tax profits from €50m to €109m.

Furthermore, base metal production increased over the first three months of 2022, but there’s the potential for supply chain issues to impact the steady production flow.

The company also has a trailing P/E ratio of 5.72. When compared with an industry rival, Jubilee Metals, it’s possible that Central Asia Metals may be cheap at its current price of 221.5p, because Jubilee has a trailing P/E ratio of 11.92. Using Buffett’s method, I may therefore also be getting a bargain.

Overall, the techniques of Warren Buffett can be extremely effective when trying to find the most rapidly expanding growth stocks. Central Asia Metals has a track record of strong earnings and may be cheap at the moment, so I’ll be adding it to my portfolio soon.  

That said, I do think it’s always worth looking for hidden dividend diamonds from lower down the market spectrum. Here are three examples, all of which boast yields over 7%.

Regional REIT

Regional Real Estate Investment Trust (LSE: RGL) operates a 160-property portfolio, mostly offices in centres outside of the M25. The value of the entire estate now stands at £874m.

REITs are a great option for income seekers, in my view. In addition to offering a fuss-free way of investing in property, they also help to diversify a portfolio. Oh, and the dividend stream tends to be pretty good too.

As things stand, Regional is forecast to yield a stonking 8.9% in FY22! That’s not enough to beat inflation, but it’s a far better option for me than keeping cash in a bank account.

Risks here include the potential for lower demand for the company’s sites as working from home continues to be popular following the pandemic. Inflationary pressures could also see some existing tenants struggle to pay rent.

However, I like what I see here. I’d be willing to take a position in Regional.

Central Asia Metals

A lot of UK investors will hold shares in FTSE 100 miners for the sizeable yields they offer. However, at 8.8%, small-cap Central Asia Metals (LSE: CAML) is another dividend monster.

Sure, there’s no ‘free lunch’ here. Investing in the mining sector can be a rollercoaster ride, particularly as explorers and producers have no control over the price of the metals and minerals they dig for. The fact that Central Asia Metals is principally based in Kazakhstan might be enough to put some people off too.

On a more positive note, the demand for metals look set to soar in the years ahead as the transition to green energy continues to gather pace. As a low-cost producer of copper, zinc and lead (the latter two coming from its mine in North Macedonia), the £400m-cap could be ready to hit a purple patch. Again, I’d be comfortable buying this stock.

Topps Tiles

With a market capitalisation of under £90m, ceramic and porcelain tile distributor Topps Tiles (LSE: TPT) is approaching micro-cap status. The tendency for stocks this small to be pretty volatile might not suit all investors, but I think the potential 7.1% dividend yield on offer may make up for this.

What are the dangers here? Well, Topps Tiles could see sales drop if home construction/upgrades slow in the near term as a result of the recession. This might explain why the shares are down 30% in 2022, so far. There’s also quite a bit of debt on the balance sheet to ponder.

However, a forecast price-to-earnings (P/E) ratio of a little less than eight already looks pretty low to me. Unless analysts become seriously bearish, the aforementioned dividend should also be safely covered by profit. As long as I’m appropriately diversified elsewhere, I could be tempted to buy today.

Strix

Kettle safety control manufacturer Strix (LSE: KETL) is a stock I’ve held for a few years now. Although not the sort of company to get the pulse racing, it has a huge share of a niche market.

Unfortunately, Strix is also an example of how far small-cap stocks can tumble when investors get scared. Having steadily climbed in value since listing in 2017, shares have given back a lot of their gains over the last nine months.

Am I bothered? Not really, especially as the company has already shown itself to be a consistent dividend hiker. Right now, the shares yield a forecast 4.6%. That’s clearly not enough to beat inflation, but it will help take the sting out. Despite the risks involved in buying shares, it’s also a far better return than I’d get from a cash savings account right now.

The resurgence of Covid-19 in China could cause more supply chain disruption for Strix. But with current trading meeting expectations, I think a lot of this is already priced in.

I’d happily buy more today.

Central Asia Metals

Copper miner Central Asia Metals (LSE: CAML) is another dividend share I’d be comfortable buying. The business is based in Kazakhstan and also has a lead, zinc and silver operation in Macedonia.

Naturally, the share price of any resource play is likely to be volatile and CAML is no exception. The stock has jumped all over the place year-to-date and I suspect will continue to do so, especially if the conflict in Eastern Europe drags on.

As far as income is concerned however, this stock looks like a winner. Based on analyst projections, the shares currently yield an inflation-battling 7.2%. The payouts should be covered well over twice by profit too.

Considering the potentially huge demand for copper in the years ahead (due to the green energy revolution), this dividend share also looks cheap at less than six times forecast earnings.

Premier Asset Management

Asset managers have been hit hard by people moving their money out of the markets. Premier Asset Management (LSE: PMI) is just one example. The company’s share price has dropped by over a third in 2022 even though it’s up over 10% in a year.

Even management believes there could be more to come. In last week’s half-year results, CEO Mike O’Shea said the outlook for investment markets “remains uncertain.”

On a more positive note, Premier also reported a 60% rise in pre-tax profit in the six months to the end of March. That should mean that dividends are safe for now. Speaking of which, the interim payout was kept steady at 3.7p per share. If it does the same with the final payout, the shares currently yield a massive 8.1%!

Of course, Premier is just one option for investors in a very competitive space. A risk here is that it may need to lower its fees in an effort to remain competitive.

Then again, this might not be necessary. No less than 90% of its funds have outperformed the median return over three years.

Latest sales figures from Tesla underline how strongly interest in these next-generation vehicles is growing.

Revenues at the California company soared 81% year-on-year to $18.8bn, smashing broker expectations by around $1bn. Tesla said it expects to make 1.5m vehicles in 2022, up from around 930,000 last year.

A cheap UK share I’d buy

I think buying shares in brand leader Tesla is a great idea today. But I think another great option for UK share investors is to buy businesses that produce critical materials for EVs.

This is why I’d snap up cheap UK share Central Asia Metals (LSE: CAML) today. The business produces copper in Kazakhstan along with zinc and lead in North Macedonia. Copper is needed in huge quantities for wiring in electric vehicles and to create charging points that make them run. Lead and zinc meanwhile, are essential elements in battery production.

Researchers at Rystad Energy think copper consumption, for example, will rise 16% by the end of the decade to 25.5m tonnes. They also think that increasing EV sales and strong renewable energy, consumer electronics and construction markets will turbocharge demand for the red metal.

Rystad also believes that demand will grow ahead of supply expansion too, resulting in a 6m-tonne deficit. This is clearly a good omen for copper prices and, consequently for Central Asia Metals, its profits outlook.

Brilliant value for money

It’s also worth mentioning the excellent all-round value for money that Central Asia Metals provides at current prices of 275p per share. It trades on a forward price-to-earnings (P/E) ratio of 6.8 times, well inside bargain-basement territory of 10 times and below.

City analysts think the commodities producer’s earnings will rise 11% year-on-year in 2022. This is perhaps no surprise given the strength of EV sales and how strongly base metals prices are rising.

6.2% dividend yields!

I like Central Asia Metals in particular because of its bumper dividend yields. For 2022, this registers at a mighty 6.2%. It’s a reading that smashes the broader 3.5% average for UK shares today.

I think the long-term outlook for Central Asia Metals is exceptionally bright as demand for its base metals grows. But there’s possible dangers out there that could hit profits and shareholder returns hard.

Problems on the production front and setbacks with exploration could hit earnings forecasts hard. So could downturns in the global economy that could hit the prices it receives for its copper, lead and zinc.

However, I believe these risks are fairly well reflected in Central Asia Metals’ ultra-low valuation. This is a cheap UK share I think could be a good buy for my portfolio.

What is this dividend share?

The stock is copper miner Central Asia Metals (LSE: CAML). Listed on the Alternative Investment Market (AIM) since 2011, it’s been operating the low-cost Kounrad solvent extraction and electrowinning (SX-EW) facility in Kazakhstan for the last decade. Annual production here now hits somewhere in the region of 12,500-13,500 tonnes.

In addition to Kounrad, the £500m-cap also runs a zinc and lead mine in North Macedonia, producing roughly 25,000 tonnes and 32,000 tonnes respectively every year.

I reckon there are a few reasons for CAML’s recent share price surge.

30% price rise

First, there’s the rise in commodity prices we’ve seen over the last couple of months, partly due to supply concerns following the invasion of Ukraine by Russia.

Second, recent numbers from the company have been excellent. Indeed, 2021 was its “most profitable year to date“. Earnings before interest, tax, depreciation and amortisation (EBITDA) and margins hit $141.5m and 60% respectively. It also ended last year with net cash of almost $23m.

Last week’s Q1 operations update provided another boost. It said it was on track to meet full-year production targets at both sites. As a result, Peel Hunt estimates that FY22 EBITDA will now come in slightly higher than previously predicted. On a longer timeline, the broker believes CAML will be debt-free by the beginning of 2024. It should also have sufficient cash for acquiring new projects.

This all sounds pretty good to me. Actually, it makes Central Asia Metals shares look something of a steal, valued as they are at a little less than seven times forecast earnings.

And the income?

As nice as the recent appreciation in the price is, I still think CAML remains attractive, primarily for the dividend stream. The total cash being returned to holders for 2021 will be 20p per share. That’s equivalent to a trailing yield of 7.4%!

Since this amount represents 45% of 2021 free cash flow (CAML has a policy of paying up to 50%) and business is good, I think there’s a fair chance of it being raised again this year.

Buyers beware

Of course, nothing is nailed on. Increasing energy costs and the need to pay higher wages are potential headwinds going forward. The markets for the metals that companies like CAML produce — which it has absolutely no control over — are notoriously volatile too.

We should put the recent rise in its place as well. The stock may have jumped in the last few weeks. However, the share price is now only slightly higher than where it was a year ago. This is why it’s vital to take a long-term perspective on performance.

Best of both worlds?

I continue to believe that Central Asia Metals is a potentially great buy for a dividend–focused portfolio, albeit one that is already suitably diversified away from mining stocks.

If the growing demand for renewable energy sources brings about a commodities supercycle as a few in the market are predicting, there could also be some nice capital appreciation to boot.

#1: Central Asia Metals

I’ve recently tipped penny stock Steppe Cement as a top stock to buy because of its pivotal role in Kazakhstan’s urbanisation programme. Demand for the building material is likely to surge as construction in towns and cities picks up. For the same reason I’d buy Central Asia Metals (LSE: CAML), too, a copper miner in the transcontinental country.

Thanks to its high conductivity, malleability and resistance to disintegration copper is a popular material in the construction industry. And Central Asia Metals pulls this red metal from its Kounrad project in Kazakhstan, putting the business on the doorstep of this urban revolution.

Riding the electric vehicle craze

I also like Central Asia Metals because it’s a great way to play another twenty-first-century phenomenon: the electric vehicle (EV) boom. Copper demand is exploding as adoption of these low-emissions vehicles takes off. But this is not the only way Central Asia Metals is exploting the EV market. It can expect the zinc and lead it pulls from the Sosa mine in North Macedonia to soar as well. These materials are essential in the manufacture of car batteries.

Central Asia Metals is packed with potential, then. However, it’s also not without risks and any production problems at its Asian and European operations could hit profits hard. It’s also worth noting that political instability has risen in Kazakhstan in recent months and could ignite again at any moment.

Disruption to Central Asia Metals’ operations could follow, whilst fresh turbulence could hit construction activity in the country too and consequently demand for the miner’s metal. That being said, as things stand right now I think the rewards of owning this stock outweigh the risks.

#2: Ediston Property Investment Company

Inflation is heading through the roof and is something I as a share investor need to be prepared for. The tragic war in Ukraine has supercharged already-elevated levels of inflation in the UK as supply chain issues have worsened. The stalemate in Eastern Europe has raised the prospect that extreme price rises could persist too.

Reflecting this chilly outlook the Bank of England now warns that inflation here could beat its prior forecast of 7.25% by “several percentage points”. So I’m considering adding Ediston Property Investment Company (LSE: EPIC) to my portfolio. Property stocks have long proven to be a great hedge against inflation as the rents they charge tend to rise in line with broader prices.

Playing the retail revolution

I wouldn’t just buy this penny stock to protect me from the ravages of inflation, though. I think it’s a great way to capitalise on the changing way that we do our shopping in the post-pandemic age. You see Ediston operates retail parks up and down the country. The large shopping units these are home to are becoming increasingly popular as people prefer spacious shopping outlets over cramped high streets.

Retail parks also play a critical role in the online shopping industry, a quality that Savills says is attracting brands to consider their expansion in these retail destinations. The estate agency says that

“[these] large and comparatively low-rented units, combined with good car parking provision and accessibility means that retail park assets are suitable for servicing click-and-collect orders, customer returns and home deliveries.” Savills adds that this means shopping parks are essentially “functioning as last-mile fulfilment centres.”

A dirt-cheap penny stock

The Ediston share price has slumped despite that aforementioned boost that inflation will provide to its rent rolls. This fall is due primarily to fears that the cost of living crisis could hit its tenants hard, in turn prompting requests for rent reductions and resulting in empty lots as retailers go bust.

However, I think the scale of recent selling is over the top. At 78p per share the property giant is trading at an 11% discount from January’s two-year closing highs. I think this represents a juicy dip buying opportunity for me.

#3: Springfield Properties

A stream of positive trading updates have continued to flow in from Britain’s listed housebuilders. A number of encouraging home price reports have also flowed in, suggesting that Britain’s housing market remains rock solid since the turn of 2022. This makes me believe that ‘nearly’ penny stock Springfield Properties (LSE: SPR) remains an attractive buy.

In fact Scottish housebuilder Springfield (which trades at 146p) may be one of the savviest ways to play the housing market. This is because residential property prices north of the border are rising particularly quickly. Latest HM Land Registry data showed average prices in Scotland rise 11.2% year-on-year in December. That’s around half a percentage point higher than the UK average.

Record order books

The strength of market conditions can be seen in Springfield Properties’ private housing order book. This rose to record levels at the end of 2021.

The business is taking aggressive steps to capitalise on the favourable marketplace, too, and it recently entered the thriving private rented sector. Furthermore, Springfield also remains committed to expansion through acquisitions and in recent months snapped up Highlands-focussed developer Tulloch Homes for £56.4m.

I think the main danger facing housebuilders is that of raw materials shortages. It’s a problem that could send costs through the roof and even disrupt its construction plans. However, as of right now house price inflation continues to outpace the rate at which building product prices are increasing. And whilst I can’t be sure, I expect this to remain the case long into the future. So I’d happily buy Springfield Properties for my portfolio this April.