03/17/2017 2:50 am EST
Franco Nevada Corp. (FNV) is a leading gold-focused royalty and streaming company. Based in Toronto, the company has 340 mining properties which are in varying stages of production.
Thanks to its business model, Franco Nevada bears no operational risks related to exploration, permitting, development, or mining. Instead, the company funds miners in return for a stream of their future output at a highly discounted price.
So Franco gets to ride all the upside of the sector with limited risk. In fact, the company's costs are so low, it can remain profitable even in a falling metals price environment.
Revenue sources are about 66% gold, 21% silver, 7% platinum group metals, 5% oil and gas, and 1% other.
Debt-free Franco Nevada has about $1.4 billion of available capital that can be put to work in opportunities management identifies. The $11 billion company has been consistently paying dividends and has faithfully increased those for nine consecutive years since going public.
The stock also has strong upside potential thanks to its exposure to exploration and expansion. Discoveries and eventual production on properties in which Franco has an interest can boost future revenue considerably.
In the meantime, by owning Franco-Nevada, you get great exposure to gold's inflation-busting benefits, a large and growing dividend, and a possible kicker as precious metals move deeper into their secular bull market.