In its “Global Outlook” report, the International Energy Agency predicts that the bulk of the increase in the demand for energy around the world will be from emerging market nations such as China and India. Along with that, there will be a tremendous need for commodities such as copper, gold, and coal, among others, to satisfy the needs of the consumers and companies in those nations. Securities in the natural resources sector such as Exxon Mobil (NYSE: XOM), the world’s biggest oil company, Goldcorp (NYSE: GG), the world’s biggest gold firm, and promising small caps in the energy sector such as Mondial Ventures (OTC: MNVN), and Premium Exploration (OTC: PMMEF), in the gold group offer a wide array of choices for investors.
Growth around the world is expected to increase consumer spending by the trillions in emerging market nations.
Much of that will obviously be for oil, natural gas, coal, and other forms of energy to power and heat homes, offices, factories, etc…. Copper and iron ore will be needed for the massive building projects that China and others have underway. The Chinese policy of urbanization is moving more than 100 million in from the county to cities across the world’s most populous nation. India is expected to have an even bigger need for energy than China. India and China are also the two biggest buyers of gold in the world, too.
For investors, there are natural resource stocks in every commodity group to meet all goals.
For income investors, there are massive conglomerates operating around the world such as ExxonMobil and BHP Billiton (NYSE: BHP), the world’s biggest natural resources company. At present, the average dividend for a member of the Standard & Poor’s 500 Index is under 2 percent. The dividend yield for ExxonMobil is 2.58 percent. For Goldcorp, it is 2.45 percent. The dividend yield for BHP Billiton is 3.41 percent. As with many other massive firms in the natural resources sector, BHP Billiton and ExxonMobil have a history of increasing the amount of the dividend. From that, long term shareholders get a raise for simply owning the stock!
Growth investors must look to small caps such as Premium Exploration and Mondial Ventures.
ExxonMobil, Goldcorp, and BHP Billiton are great companies that should be rewarding for shareholders over the long term, but high growth is not coming. The analyst community projects earnings-per-share growth of 2.96 percent over the next five years for ExxonMobil. For BHP Billiton, earnings-per-share growth is expected to come it at 5.20 percent. Goldcorp is estimated to earnings-per-share growth of 15.60 percent. With promising holdings in the legendary oil country of Texas for Mondial Ventures and in the rich gold fields of Idaho for Premium Exploration, there is the potential for high growth that simply does not exist anymore for the ExxonMobils and BHP Billitons of the world.
Investors should always put demographics on their side, too, not matter what the objective.
That means purchasing natural resource stocks for their portfolio. More consumers means more oil, copper, coal, gold, and other natural resources will be consumed around the world. For long term investors looking for growth and income, the natural resource sector can meet those objectives.
Will you be investing in the natural resource sector?
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Jonathan Yates is a financial writer with degrees from Harvard, Johns Hopkins and Georgetown University Law Center. While much of his career was spent working for Members of Congress on Capitol Hill, he was also General Counsel for a publicly traded corporation; and worked in the research department of a brokerage house.