If You Can’t Beat ‘Em, Buy ‘Em – Today’s Best Commodity Investment

Shah Gilani Aug 22, 2022
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At this point, we’ve all been feeling the impact of inflation, especially here in the United States where headline inflation has been above 8% for the last five consecutive months.

All that inflation is eating away at the purchasing power of savings and underperforming investments, which is why it’s more important than ever to find ways to profit off the inflation, in order to keep pace and not get left behind.

Over the last several weeks, I’ve covered various types of inflation-beating investments, and this week we’re going to go straight to the source and talk about investing in commodities.

Raw materials including oil, natural gas, precious metals, copper, iron ore, aluminum, wheat and corn are natural hedges against inflation because in most cases the price of commodities is a key component of the rising costs in the first place.

So, as they say, if you can’t beat ’em, join ’em.

Commodities can be traded on the futures market, where commodities futures contracts are bought and sold at a certain time in the future – but for retail investors the easiest way to profit from higher commodity prices is to purchase commodity exchange-traded funds, exchange traded notes, or individual commodity stocks.

Of all those choices, my current favorite commodities investment is Rio Tinto Group (RIO).

Headquartered in London, Rio Tinto engages in exploring, mining, and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and lithium.

Of all of the uses for RIO’s commodities, there are two that I’m particularly interested in…

The aluminum, copper, and iron ore that RIO produces are critical components to building cities and infrastructure projects around the world, especially in China.

And the lithium and copper that RIO produces are both must-have inputs to building electric vehicles.

With global demand for copper, iron ore, lithium and aluminum, skyrocketing over the past 12-18 months, it’s no surprise that RIO’s financials look fantastic!

From 2020 to 2021, revenue increased 42.33% from $44.61 billion in 2020 to $63.49 billion in 2021.

On the bottom line, net income exploded 115.9% from $9.77 billion in 2020 to $21.09 billion in 2021.

In addition to stellar financials, the company’s balance sheet is great, with $13.91 billion in cash versus $12.82 billion in debt.

But here’s the best part…

Not only does RIO produce and sell commodities which are critical to the world’s growth, it also pays investors a massive 11.46% yield for holding the stock.

That makes RIO one of my favorite inflation-beating investments, hands down.

Make sure to check back in next Monday, and the following Monday’s as well, as I take some time to draw your attention to series on inflation-beating investment ideas.

Until then, have a great week.

Sincerely,


Shah

One reply on “If You Can’t Beat ‘Em, Buy ‘Em – Today’s Best Commodity Investment

  1. Philippe FREY says:

    I agree with you, Shah. But why did the dividend get cut recently if everything is so successful with this company ?

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