As Washington struggles in finding a solution for the debt ceiling debate and the eurozone still battles with the devaluation of the euro, the safe havens of precious metals can mean serious profit opportunities for investors.

Record gold prices are capturing the headlines, having reached record highs of about $1,600 per ounce this week, a 530% climb in a decade. But other metals have soared in value as well.

One of the strongest performers in the metal market has been copper. Prices of the metal are approaching an all-time high as a result of insatiable demand from China and other emerging economies. Copper is used in diverse applications ranging from plumbing pipes and electrical wiring to automobile manufacturing and electronic devices. The metal is currently trading near $4.50 a pound, which is well above its previous 2008 high of $4.02. Some analysts even say copper prices could exceed $5 per pound this year — levels never seen before.

Another metal experiencing a major rebound is steel. Steel prices whipsawed from all-time highs in 2007-2008 and experienced a decline of almost 50% in the second half of 2008 and 2009, when the global financial crisis worsened and negatively affected steel demand. But the steel cycle is perking up again. Global prices for hot-rolled steel recently hit $963 a ton, a 36% increase from just one year ago. And prices haven’t reached their peak yet. The World Steel Association forecast a 13% increase in consumption this year and a further 6% gain next year. 

It’s clear the metal market is on its way to a significant recovery. Here are three stocks that not only benefit from the rebound in metal prices, but also provide rich yields for dividend investors wanting to take advantage of the situation. 

1. Southern Copper Corp. (NYSE: SCCO)
Yield: 6%
Southern Copper mines, smelts and refines minerals in Chile, Peru and Mexico. The company derives three-fourths of its revenue from copper and about 10% from molybdenum, a byproduct of copper mining. The balance of sales comes from other metals such as silver, zinc and gold. Southern Copper has copper ore reserves of 59.7 million tons, making it the world’s largest copper miner.

In the past five years, Southern Copper’s earnings per share (EPS) have grown 3% a year, while dividends have improved at a 7% yearly rate. Because of rising copper prices and increased production, the company is in growth acceleration mode. Sales jumped 31% in the first quarter of 2011 compared with the same period a year earlier, and analysts forecast yearly growth averaging 25% for the next five years.

The company’s dividend payout appears high at 93% of earnings, but is actually reasonable, at just 60% of cash flow. In addition, shares are valued at just 10 times next year’s earnings. But despite the solid financial position, shares have lost 27% of their value since the beginning of the year because of fears that Peru’s new president, Ollanata Humala, would impose new taxes on the mining industry. So far, those fears have proven unfounded. Still, with a 6% yield, the stock is an enticing holding for income investors. 

2. Nucor Corp. (NYSE: NUE)
Yield: 4%
Nucor operates highly efficient mini-mills for steel production and is one of the largest steel producers in the United States. The company is also North America’s largest recycler, using scrap steel as its primary feedstock. 

Nucor’s profits soared 229% in the second quarter of 2011 compared with the same period in 2010, thanks to increased steel prices and mill shipments. Analysts look for Nucor to produce five-fold profit growth this year and 40% gains next year.

Nucor has raised dividends 38 years in a row and grown payments 9% a year in the past five years to a $1.45 annual rate. The shares currently yield almost 4%. The dividend payout is manageable at just 59% of cash flow, so it could easily rise from current levels. 

Nucor’s forward price-to-earnings (P/E) ratio is just 11 and although share prices recently fell 16% following guidance from management that third-quarter results will be lower than the previous quarter, Nucor continues to experience slow but steady improvement in demand.

Action to take –> My top pick for conservative investors is Nucor because of the stock’s attractive yield and consistent dividend history. More aggressive investors should look into Southern Copper, which pays a rich dividend and may benefit from greater political stability in Peru.

P.S. — We found an obscure mining company that tossed back 19% in dividends last year (plus another 34% in capital gains). If you think that’s impressive, wait until you see this video…