With the market having a bit of a meltdown in recent weeks, plenty of UK shares have taken a tumble. Yet many of the underlying businesses are actually performing admirably. So, is this a buying opportunity for my portfolio? Let’s explore two dividend stocks that I’m tempted to buy today and hold in my portfolio for the next decade.
Surging profits, dwindling share price
I’ve explored Anglo Pacific Group (LSE:APF) before. But as a reminder, this is a royalties mining business. It provides the upfront funds for mining companies like Rio Tinto to develop a mining site in exchange for a percentage of the materials dug up from the ground.
In recent years, management has been expanding its portfolio of sites to focus on renewable and battery metals. In early 2021, the group completed its largest acquisition to date, adding a sizeable cobalt stream to its royalties. And with demand for the metal surging, courtesy of the electric vehicle space, the company is already reaping the rewards.
Its cobalt mine alone contributed a total of $16.5m (£12.2m) last year. And with supply chain disruptions pushing up material prices, the group’s total revenue surged by 95% to a new all-time high! Yet despite this impressive growth, shares of this UK business are actually flat over the last 12 months and still trade below pre-pandemic levels.
The rising materials prices obviously haven’t gone unnoticed by the competition. And with many looking to capitalise on the situation, the supply will eventually meet the demand. This would undoubtedly send metal prices back down and disrupt Anglo Pacific’s impressive underlying growth.
But over the long term, demand for raw materials isn’t likely to disappear. And at today’s price combined with a 6.3% dividend yield, this could be one of the best UK shares to buy today for my portfolio. At least, that’s what I think.
Digging for profits with UK shares
Continuing the theme of mining companies, Glencore (LSE:GLEN) is another that has caught my attention this week. Just like Anglo Pacific, the group has a diversified metals portfolio geared towards renewable energy metals like copper, cobalt, and nickel.
The group has also profited from rising materials prices. So, it’s hardly surprising to see the revenue stream expand by 43%, hitting $203.8bn (£150.1bn) in 2021. Meanwhile, profits returned to their highest point since 2018. What’s more, with inflation pushing up metal prices even higher, it’s possible that the financial performance of 2022 could be even more groundbreaking. That’s why I think this could be one of the best shares to buy and hold today.
Of course, there are some risks to consider. On top of the exposure to fluctuating commodity prices, Glencore’s cobalt production comes mainly as a by-product of its copper mining activities in the Democratic Republic of Congo. This region is not exactly known for political stability, and should a shake-up in government occur, Glencore’s mining activities could become compromised.
However, with additional cobalt streams pouring in from Australia and Canada, along with the rest of its metals portfolio, I feel buying and holding shares in this UK mining group is a risk worth taking.
Zaven Boyrazian owns Anglo Pacific. The Motley Fool UK has recommended Anglo Pacific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
