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Sometimes it’s ironic in the way some industries continue to perform while the general economic conditions of a country are deteriorating. Not only do these companies prosper during these times, but often provide a counterbalance to the negative forces that are at play in an economy. Take for the instance, a case of the gold production sector and the crude oil and petroleum industries. Gold is well known as a hedging instrument that investors use to hedge their risks through stocks and ETFs during the times of economic difficulty while on the other hand, crude oil is linked more to the demand and supply factors of the commodity with relatively a low co-relation with economic downturn or upheaval of a country or the world.
During the current pandemic situation that has gripped the world, both the commodities, gold and oil, have witnessed the strange behavior in their prices that has hardly been witnessed ever before. Earlier this year the prices of gold fell sharply with the Federal Reserve announcing a cut in its interest rates. It is generally observed that when the Fed cuts rates the prices of gold rise, so when this event occurred it baffled a lot of experts while worries of a deep world recession started taking a hold. Similarly, an unprecedented event happened with the prices of crude oil in the month of March, the WTI crude futures started to trade in negative territory also running below zero for some hours, given the massive amount of oil that was being produced in the United States compared to the demand for this commodity. Both these events have however passed now and the markets for both of them now seem more stabilized.
Today in this regard, our focus is to discuss the performance of the three leading gold stocks and top two oil stocks listed on the London Stock Exchange in terms of the dividends they have declared in the past few months. It is to be noted that several companies belonging to other industries have either cut down or have completely withdrawn their dividend that had been previously declared in order to conserve cash due to uncertain business environment and what it might entail in the next few months. United Kingdom is currently fighting a pitched battle with the coronavirus pandemic, till now more than 200,000 people in the country have been infected by this virus out of which at least 30,000 have already lost their lives.
Gold Stocks on the LSE
Gold as a commodity has had a steady performance over the past few months. In the past one month, the prices of gold have increased by more than 2.5 per cent and in the past six months period it has increased by nearly 15.53 per cent with the metal still going strong as the pandemic continues to ravage the global economy. Fresnillo PLC, Petropavlovsk Plc and Polymetal International PLC are three of the leading gold producing companies listed on the London stock exchange.
- Fresnillo PLC (LON:FRES) – Fresnillo is a Mexico-based precious metal producer and is primarily focused on gold and silver production. It owns seven mining licenses in Mexico out of which two are in the production phase, two in exploration phase and the rest in development phase.
The company has declared a dividend of 9.5853 pence per share as a final dividend for the year ended 31 December 2019 to be paid on 2 June 2020. The shares of the company are listed and traded on the London Stock Exchange since 2008 and they also form part of the FTSE 100 index.
FRES stock is trading at GBX 666.80, down 1.01 percent, on 7 May 2020 (2:31 PM GMT).
- Petropavlovsk PLC (LON:POG) – Petropavlovsk is a Russian gold mining company with mining leases located in the far east of the country and is one of the largest gold mining and production companies in that country in terms of its scale of operations, production, reserves it holds and overall resources it owns. The shares of the company though are listed on the London Stock Exchange and also form part of the FTSE 250 index.
The company has not been paying dividends in the past few years, but its shares have been performing well on the London stock exchange. In the past one month the shares of the company have gained nearly 17.4 per cent in value are currently trading at GBX 24.95, up 2.04 percent, as on 7 May 2020 (2:35 PM GMT).
- Polymetal International PLC (LON:POLY) – Cyprus-based company, Polymetal International has a mining and production interest in both gold and silver. The company’s assets though are located in Kazakhstan and Russia where it enjoys a low cost base and has a very low cost of production. The company falls amongst the largest producers of gold in Russia. The shares of the company are dually listed on the London Stock Exchange and the Moscow Stock Exchange.
The company has declared a dividend of US$ 0.42 per share as final dividend for the year ended 31 December 2019 to be paid on 29 May 2020 subject to shareholders approval. Shares of Polymetal International are trading at GBX 1,653.00, down 1.05 percent, as on 7 May 2020 (2:38 PM GMT).
Crude Oil Stocks on the LSE
On the London Stock Exchange, petroleum and crude oil driven sector is led by two of the largest publicly listed companies in the country- BP Plc and Royal Dutch Shell Plc. Both companies are present in all three streams of the petroleum industry segments hence are able to withstand the risk factors associated with companies operating in just one segment. For example, while on the production side the fall in crude prices might cause the company to lose revenue but the same may not be so with marketing of refined petroleum products which might be witnessing the strengthening price. Both companies have declared dividends in the recent past.
- BP Plc (LON:BP) – the company has declared an interim dividend of 10.50 cents per ordinary share for the first quarter of 2020 to be paid on 11 May 2020. The stock of the company is presently trading at GBX 320, up 2.01 percent, as on 7 May 2020 (2:45 PM GMT).
- Royal Dutch Shell Plc (LON:RDSA) – The company has declared a dividend of US$0.16 per share payable to both its class A and Class B shareholders for the first quarter of 2020, lower than the previously declared dividend of US$0.47 per share.
RDSA stock is trading at GBX 1,333.60, up 3.72 percent, as on 7 May 2020 (2:46 PM GMT).
