Buy This, Not That: Copper Profits From Tariff Tears

Shah Gilani|April 2, 2025

Markets are holding their breath.

At 4 p.m. ET, President Trump is set to announce a slew of new tariffs.

No one knows how stocks will react. But everyone wants to know how to position themselves.

Especially for copper miners – the metal at the heart of our electric future.

With potential tariffs looming over foreign metals, U.S.-based producers should be winners, right?

Not so fast…

I’ve found a surprising contender that crushes the competition despite having just one major US mine.

Its profit margins are nearly 3X higher than America’s largest copper producer.

And while markets swirl with uncertainty, you’ll collect a massive 6.9% dividend while waiting for clarity.

Let me show you the numbers that matter most…

Click on the thumbnail to check out today’s video.

Transcript

Hey everybody.

Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

And guess what?

It’s Wednesday.

President Trump is speaking from the Rose Garden at 4 p.m. ET, right after the market closes, to tell the world what his tariff policy will be.

The market is probably going to react after hours.

We could see a pop or a drop. But we should see something.

It’s unlikely nothing will happen, although a lot of what could happen has been baked in already.

Everyone is trying to game it.

The only certainty is the uncertainty in the markets.

We don’t know what is going to happen from the announcement or the aftermath.

Markets are going to react one way or another.

Now, a lot of you have asked me what I think of U.S. copper mining companies, because copper prices are going to go through the roof.

We need copper, and we know we’re going to need a lot more of it.

Everybody wants to know how taxes will impact copper miners.

Should we buy companies that only mine in the US because they won’t face tariffs?

If copper is sourced in Peru, Mexico, or elsewhere, it is going to be taxed heavily.

We don’t know what the copper tariffs will be.

But here’s your showdown for today.

It’s between Freeport–McMoran (FCX) and Rio Tinto (RIO).

Freeport-McMoran is my choice for the really stalwart copper producer in the United States. They own four of the five largest copper mines in the US. The other is owned by Rio Tinto.

So I’m going to start with Freeport-McMoran, symbol FCX.

I’m going to pull the chart up while I give you a couple of stats on FCX.

Freeport-McMoran, all around, I think, a well-run company.

We’re talking about a $54.8 billion market cap, talking about annual revenues trailing twelve months of about $25.5 billion.

They have a 7.4% profit margin. Not bad. Not great for a mining company. But they do have those four huge copper mines in the US.

My enthusiasm for Freeport kind of fades out there.

If you look at this chart, they’re down 32% from their 52-week high.

That’s not a pretty look on chart as far as I’m concerned.

The stock is struggling to get above its 50-day moving average, which is this blue line, well below the 200-day moving average.

All in all, you know, it’s got a great balance sheet. Can’t really fault it.

The problem I have with Freeport-McMoran, and there are a couple of them, is their quarterly revenue growth year over year is down 3.1%.

Their quarterly earnings growth is actually negative year over year, down 29%.

They pay a dividend, but the 1.57% yield is not very attractive. That’s paltry.

1.57% yield on a 46% payout ratio.

In other words, 46% of the net income available to common shareholders goes to pay the dividend.

That’s a reasonable amount.

But a 1.57% yield doesn’t move any needle for me.

Rio, even though it only has one big mine in the US, is the buy here for a bunch of reasons.

Now, the chart looks ugly.

However, Rio is down 20% from its highs back in May 2024. So

But, the company has a great-looking balance sheet. We’re talking about a $53 billion trailing 12-month revenue stream.

Their profit margin is 21.5%. That absolutely hammers the measly 7.4% from Freeport-McMoran’s profit margin.

That’s a big difference on much more revenue. That spells a lot more money falling down to the bottom line.

Another thing I like about Rio is its growth. While quarterly revenue growth is down 1.69%, quarterly earnings growth is up year over year, a robust 16%.

That’s a heck of a lot better than Freeport’s negative 29% quarterly earnings decline.

Also, Freeport-McMoran sends plenty of other products into the US that are going to be hit with tariffs.

Zooming out, Rio Tinto looks much better for all those reasons and one in particular.

The dividend yield on Rio Tinto is a whopping 6.9%. The payout ratio is 61.5%.

So, yeah, a little bit higher payout ratio, but a heck of a lot bigger bang for your buck in terms of dividend yield.

So if I’m going to play a copper miner I’m looking at these two.

Hands down, I’m going to go with Rio Tinto for the dividend.

Because at least I get paid to sit with the stock.

That’s it for your BTNT today.

I’m sure all of you will be tuning in to see what the president has to say.

It’s going to be interesting.

Catch you guys next week.

Cheers.