My colleague Nathan Slaughter loves to invest in scarce resources.

Nathan’s enthusiasm is hard to fault given the world’s insatiable appetite for gold, oil and other depleting resources. As supplies dwindle, prices for these commodities are sure to rise.

You could invest directly in scarce resources through commodity markets, but Nathan argues that these markets are risky and best left to experienced pros. Instead, Nathan recommends buying shares of companies that own these critical goods — in fact, that’s exactly what he does in his newsletter Scarcity & Real Wealth.

This approach gives investors a stake in a business that has tangible assets and earnings. You can also collect dividends. Many resource companies offer attractive yields of 3% to 4%.    

Right now, one of my favorite scarce resources investments is Freeport-McMoRan Copper & Gold (NYSE: FCX). Freeport-McMoRan is the world’s leading producer of copper — and copper consumption is forecast to grow 60% in the next 10 years.

The stock is attractively priced, trading near its 12-month low. In addition, Freeport-McMoRan is closing the acquisition of two large oil and gas businesses that will diversify its portfolio and reduce risk, expand its exploration and development opportunities, and greatly increase cash flow available for dividends and other purposes.    

At its current share price of about $33, Freeport-McMoRan shares are trading at a lowly forward price-to-earnings ratio around 7, based on consensus analyst estimates of earnings per share of $4.38 this year.  

In addition to being the world leader in copper production, Freeport-McMoRan owns vast reserves of gold, molybdenum and other metals.

The company’s portfolio of assets includes acreage in the Grasberg minerals district, one of the world’s largest copper and gold mines in terms of recoverable reserves; significant mining operations in the Americas (including the large-scale Morenci and Safford minerals districts in North America and the Cerro Verde operation in Peru and El Abra in Chile); and the Tenke Fungurume minerals district in the Democratic Republic of the Congo.

At the end of last year, Freeport-McMoRan estimated its recoverable reserves at 116.5 billion pounds of copper, 32.5 million ounces of gold, 3.4 billion pounds of molybdenum, 321.4 million ounces of silver, and about 840 million pounds of cobalt. The company has various copper expansion projects underway that are expected to increase annual copper production from 3.66 billion pounds in 2012 to more than 5 billion pounds by 2015.

Last year, lower copper prices hurt Freeport-McMoRan’s EPS, which fell to $3.19 from $4.78 in 2011. However, although the company’s operating margins declined due to lower copper prices, those margins remained a comfortable 32%. In addition, the long-term outlook for the company remains bright: Analysts are looking for EPS growth of 36% this year and 8% next year.

Copper prices could be volatile in the near term because of the uneven pace of the world’s economic recovery. However, even in a worst-case scenario in which copper prices drop another 30% to $3.30 a pound, Freeport-McMoRan estimates the effect on revenue would be only 6%.

Even a minor rebound in the U.S. housing market would be a growth catalyst for Freeport-McMoRan’s copper business. Copper is used extensively in residential and commercial construction in electrical wiring, plumbing pipes, and heating and cooling systems. Building applications account for 40% of U.S. copper consumption, so a pickup in housing starts would increase copper demand.

Freeport-McMoran is improving the diversification of its world-class mining portfolio by purchasing high-quality oil and gas assets. The company is paying $20 billion to acquire Plains Exploration & Production (NYSE: PXP) and McMoRan Exploration (NYSE: MMR), in which Freeport-McMoRan already held a 36% ownership interest.

These transactions not only reduce the company’s exposure to swings in copper prices but provide Freeport-McMoRan with growth opportunities from new exploration and production projects.

Plains and McMoRan Exploration both hold attractive properties in the Gulf of Mexico and along the Gulf Coast, and their acquisition adds 923 million barrels of proved and probable oil and gas reserves to Freeport-McMoRan’s portfolio. Thanks to those acquisitions, Freeport-McMoRan expects to more than double its annual oil and gas production in the next three years, from 46 million barrels in 2012 to 94 million barrels by 2015.

Global energy consumption is forecast to grow roughly 30% in the next 20 years, so these two acquisitions are smart moves for Freeport-McMoRan’s long-term positioning. The acquired oil and gas assets have characteristics similar to the company’s mining business: long lives, low costs, and the potential for significant growth through exploration and development.

Freeport-McMoRan continues to further diversify its business mix and recently formed a joint venture to own and operate a large-scale cobalt chemical refinery in Finland.

The company has a good dividend track record, with 7.4% annual dividend growth in the past five years. The most recent dividend increase was 25% in January 2012 to a $1.25 annualized rate currently yielding 3.9%. Freeport-McMoran also paid special dividends of 50 cents each in 2010 and 2011. The current dividend payout ratio is 39%, which leaves plenty of cushion for more dividend growth.

Risks to consider: Freeport-McMoran is taking on major debt and share dilution for the two oil and gas acquisitions. Post-acquisition, Freeport-McMoran will have long-term debt totaling $20 billion on its balance sheet, but this debt looks manageable, at 33.5% of the company’s $60 billion market capitalization.

Action to Take –> Freeport-McMoran is a great investment for those who want exposure to rising demand for scarce minerals and energy assets while collecting a generous dividend.

P.S. — If you’ve been looking to add resource stocks to your portfolio, now may be the time. The global trend for commodities is rising demand coupled with shrinking supplies. That’s why we’ve seen soaring prices for years… and it means short-term sell-offs can be rare buying opportunities. To learn more about Scarcity & Real Wealth, which focuses solely on the market’s best resource investments, visit this link (without watching any promotional video).