Wheaton Precious Metals Sees Dividend Growth Amid Inflation-Resistant Cash Flow

The precious metals streaming company Wheaton Precious Metals has been raising its dividend by 18% in the first quarter, and it still has plenty of room to grow further. The company's business model shields it from inflation and boosts cash flow.

Unlike traditional miners that sell their gold and silver at prevailing spot market prices, Wheaton provides funds to mining companies to build or expand operations in return for long-term agreements to purchase a fixed percentage of future production at low, predetermined contractual costs. This structure helps Wheaton limit its exposure to inflation compared with traditional miners.

During the second quarter, Wheaton paid an average contractual price of $9.57 per ounce of silver and $543 per ounce of gold. It sold that silver and gold for $73.41 and $4,452 per ounce, respectively, during the period. Fixed purchase costs plus elevated spot prices have boosted Wheaton's profit margins.