Silver Wheaton - commentary

The glittering performance of precious metals holdings since the beginning of the year has been gratifying ... and whoo hoo ... Silver Wheaton is now paying a dividend:

The first quarterly cash dividend of US$0.07 will be paid to holders of record of Silver Wheaton common shares as of the close of business on April 4, 2014, and will be distributed on or about April 15, 2014. Under the Company's dividend policy, the quarterly dividend per common share will be equal to 20% of the average cash generated by operating activities in the previous four quarters divided by the Company's outstanding common shares at the time the dividend is approved, all rounded to the nearest cent.
Dividend Announcement

All is not sweetness and light. http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/silver-wheaton-profit-falls-47-per-cent-on-lower-metal-prices/article17601162/ 

However, take a look at the company's financials, the size of its treasure fleet and the volume of booty aboard those ships ... arrgh matey, it's enough to attract even the most timid of pirates. In an earlier edition of The Financial Passage Maker, I noted the characteristics of mining enterprises which would be quick off the mark in the event of rising metals prices – SLW has most of 'em.

And .... in contrast to many of its peers, SLW is blessed with the combination of a business model and astute management which enables it to stay afloat nicely in good weather and bad. For those reasons, it is one of my core holdings.
For those of you who want to learn more about the dude in the photo, read this: http://en.wikipedia.org/wiki/Mel_Fisher ... some chicken farmer!

Postscript:

I hopped about SLW just after the company was formed. The ride has been interesting as precious metals prices have fluctuated significantly since that time. I've taken profits from time to time and may now add to my positions if precious metals prices decline significantly. 

As an investor, I am heartened by management's decision to initiate a dividend stream. While there is a high degree of speculation association with bets of this type, SLW is morphing into a company with some of the traditional attributes associated with a company one might consider as a more traditional investment. 

While SLW will need to make more deals to maintain flows of mine production, there is more competition. It's one of the desirable features of our economic system; namely, that success breeds competition.

To my mind, management has been wise: one cannot simply cannot build and expand forever. Otherwise, you risk the downfalls of hubris viz. the trajectories of Barrick Gold and many of its peers. They managed to accomplish an amazing feat of alchemy by turning gold into a biological by-product of digestion.

Better to wait for the “fat pitch” when conditions improve for purchasing production streams. In the meantime, investors get to share in revenues. Nice to see a company which has the interests of its shareholders in mind. Yup ... steady as she goes.