Gold mining stocks have been on a tear this year. Investors have flocked to gold as the Fed committed itself to a very dovish path and the US dollar remains weak. Easy monetary policy and economic uncertainty are typically favorable for the yellow metal. Quite naturally, companies involved in mining gold continued to climb as evident from the VanEck Vectors Gold Miners ETF’s (GDX) nearly 27% gain so far this year.
When investors think of gold, they usually buy them for hedging the risk of investing in equities rather than dividends. However, there are certain gold mining stocks that not only hold solid growth potential but also pay high dividends. A recent report by VanEck Securities showed that “precious metal miners have strong balance sheets. They tend to reward investors with dividends and much, if not all, of the group, will be cash flow positive at some point next year.”
Hence, this is the appropriate time for dividend investing as the recent slump in the gold spot prices could end up being an attractive entry point. Here are four stocks that pay outstanding dividends to their investors and should gain significantly as gold prices soar: Newmont Goldcorp Corporation (NEM), Barrick Gold Corporation (GOLD), Agnico Eagle Mines Limited (AEM), and Buenaventura Mining Company Inc. (BVN).
Newmont Goldcorp Corporation (NEM)
NEM engages in the acquisition, development, production, and exploration of gold, copper, silver, zinc, and lead. The company has operations and assets in the United States and internationally. NEM has the largest gold reserve base in the industry underpinned by its world-class ore bodies in top tier jurisdictions.
NEM formed an exploration joint venture with Agnico Eagle Mines Limited (AEM) on September 29th, to explore the Anzá project and advance other prospective gold targets of district-scale potential in Colombia. Moreover, funding for NEM’s capital projects Tanami Expansion 2 in Australia and Musselwhite Materials Handling in North America, have been approved in the previous quarter and the projects are in execution.
During the past three years, the average dividends per share growth rate for NEM was 65.9% per year. In the third quarter of 2020, the company generated a record $1.3 billion free cash flow, growing 256% year-over-year. Consequently, NEM declared a dividend of $0.40 per share, a sequential increase of 60%. The annual dividend cumulates to $1.60, which translates into a dividend yield of 2.44%.
NEM produced 1.5 million attributable ounces of gold in the last reported quarter. Revenue increased 17% year-over-year to $3.17 billion, primarily due to higher average realized gold prices. Non-GAAP EPS for the quarter came in at $0.87, compared to the year-ago value of $0.86. NEM is efficiently capitalizing on its portfolio strength and higher gold prices. Hence, analysts expect NEM’s EPS to grow 72.1% next year.
NEM closed yesterday’s trading session at $65.63, gaining 52.7% year-to-date. The stock is up 4.6% in the past month and is presently trading just 9.1% below its 52-week high of $72.22.
How does NEM stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Overall POWR Rating.
It is ranked #1 out of 30 stocks in the Miners – Gold industry.
Barrick Gold Corporation (GOLD)
GOLD engages in the exploration, mine development, production, and sale of gold and copper properties. GOLD’s operations span five continents, making it the largest gold miner on the planet. It has ownership interests in producing gold mines that are located throughout the Americas and Africa.
GOLD’s credit rating was recently…
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