Building a steady stream of passive income through dividends is one of my biggest investment aims. However, I do understand that dividends are never guaranteed. Could BlackRock World Mining Trust (LSE: BRWM) shares pay me consistent dividends?
Mining trust
BlackRock World Mining Trust is an investment trust and aims to maximize returns by investing in mining and metal securities around the world. It has a variety of holdings in blue-chip and smaller mining businesses. Some of its better-known positions are in giants such as Glencore, Vale, and Rio Tinto.
As I write, the shares are trading for 546p. At this time last year, they were trading for 609p, which is a 10% drop over a 12-month period. It’s worth remembering that many passive income stocks have seen their shares fall due to macroeconomic and geopolitical issues in the past few months.
To buy or not to buy?
Mining businesses look like good long-term options to help boost my wealth due to the heightened demand for metals and minerals. This is linked to an infrastructure spending increase throughout the world as well as the green revolution. Both of these initiatives require substantial metals and minerals, which should boost mining businesses performance and payouts. For BlackRock World Mining Trust, owning positions in top stocks, as well as up-and-coming businesses, could see it able to reward its shareholders handsomely.
Next, the shares look attractive on a price-to-earnings ratio of just eight. Recent volatility pushing the shares down has created a buying opportunity for me here.
Finally, from a passive income perspective, the dividend yield of 7.4% is extremely enticing. Furthermore, it has a good record of payout as well as forecasts indicating its payout will only increase in the next fiscal year. However, I do understand that past performance is not a guarantee of the future and forecasts don’t always come to fruition.
From a bearish perspective, mining stocks are cyclical. They’re at the mercy of economic headwinds and external factors out of their control. For example, economic issues impacting growth in China have seen its soaring demand for copper cool in recent times. Plus, when geopolitical tensions occur, demand for metals and minerals also tends to dwindle. This can hinder performance and payout which can hurt the returns policy.
Another issue for BlackRock World Mining Trust and the stocks it owns are operational issues. Mining assets are complicated and expensive. If production slows, expensive maintenance is required, or if an asset does not bear fruit, performance and payout could be impacted here too.
A passive income stock I’d buy
Overall, I believe the pros outweigh the cons by some distance when it comes to BlackRock World Mining Trust shares. I’d be willing to buy some shares when I next have some spare cash to invest.
It’s solid investor returns record and current payout, its attractive valuation, and the rising demand for metals and minerals helped me make my decision. Plus, I really like the fact it owns shares in bigger established firms, as well as up and coming mining businesses in untapped territories. This diversification is appealing to me.
