Southern Copper

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Southern Copper ( SCCO) may not be every income investor's first choice in a dividend stock -- but that's exactly why you should be paying attention to it.

The $25 billion miner lays claim to the world's largest copper reserves, at 146 billion pounds. Southern Copper also owns molybdenum and zinc reserves, the former giving SCCO minor exposure to rare earths. Copper has been the base metal equivalent of gold in the last few years, and Southern's margins show it -- the firm owns Mexican and Peruvian mines that are able to yank copper out of the ground at rock bottom costs, and as a result, it earns net margins approaching 35%.

Because around 80% of SCCO is owned by conglomerate Grupo Mexico, the firm is more conscious of shareholder returns than most, resulting in a payout ratio of approximately 80%. While profit volatility and currency translation has made SCCO's dividend fluctuate more than most, I think that the 6.98% yield is due for a boost (believe it or not).

A double-digit rally in copper prices in the last six months should fuel that dividend hike.

Southern Copper shows up on a recent list of 3 Natural Resource Stocks Yielding Up to 11%.

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