3 Dividend-Paying Gold Stocks With the Yellow Metal at Record Prices (original) (raw)

Gold can be an excellent hedge against inflation. Typically, gold is inversely valued against the U.S. dollar. When inflation runs high, the dollar weakens as its ability to purchase goods falls. When this occurs, investors might consider purchasing precious metals, such as gold.

In fact, gold prices recently hit a record price above $2,100 per ounce. For investors looking for more from their gold positions, such as dividend income, owning shares of companies can be a way to counter inflation.

Here we will examine three of our top gold stocks right now.

Gold Stock #1

Barrick Gold (GOLD) has been in business for nearly 40 years, becoming the largest gold mining company in the world during this time. The company has proven gold reserves of more than 62 million ounces as well as 10 billion pounds of proven copper reserves.

Barrick is valued at 27billiontodayandgeneratesannualrevenueapproaching27 billion today and generates annual revenue approaching 27billiontodayandgeneratesannualrevenueapproaching13 billion. The current company is the product of a mega-merger between Randgold and Barrick that occurred in 2019.

The company posted fourth-quarter and full-year earnings on February 14, and results were somewhat mixed. Adjusted earnings per share came to 27 cents, which was six cents better than expected. Revenue was up 10.5% to 3.06billion,whichmissedestimatesby3.06 billion, which missed estimates by 3.06billion,whichmissedestimatesby80 million. The company finished the year with 4.05 million ounces of gold production, and copper output was 420 million pounds in 2023.

Barrick expects 2024 production to be between 3.9 million and 4.3 million ounces. Operating cash flow rose 7% for the year to 3.7billion,andfreecashflowwasup503.7 billion, and free cash flow was up 50% to 3.7billion,andfreecashflowwasup50646 million in 2023. Barrick also managed to replace 109% of its gold reserve depletion.

The Randgold purchase is helping with Barrick’s declining reserves and reserve replenishment. Margins remain in focus, as ever, but with soaring gold prices, margins soared as well.

Barrick’s payout ratio is reasonable at 42% of forecasted earnings in 2024, excluding any potential performance dividends that are as yet undeclared, and we expect that it will rise over time given roughly flat earnings. Management recently reiterated its confidence in raising the dividend in the coming years.

GOLD stock currently yields 2.5%.

Gold Stock #2

Fortitude Gold Corp. (FTCO) was spun off from Gold Resource Corp. (GORO) into a separate public company in December 2021. Fortitude is a junior gold producer with operations in Nevada, one of the world’s premier mining-friendly jurisdictions.

The company targets high-grade gold open pit heap leach operations averaging one gram per tonne of gold or greater. Its property portfolio currently consists of 100% ownership in six high-grade gold properties. All six properties are within an approximate 30-mile radius of one another within the prolific Walker Lane Mineral Belt.

On February 27, Fortitude posted full-year results for 2023. Revenues came in at $73.1 million, 1.7% lower compared to last year. The decline in revenues was driven by an 8.7% drop in ounces of gold sold. However, a 39.8% increase in ounces of silver sold combined with 7.6% higher gold and 5.3% higher silver prices largely offset this setback.

The company recorded a mine gross profit of 41.2millioncomparedto41.2 million compared to 41.2millioncomparedto35.4 million last year due to lower production costs. Hence, the company enjoyed an expansion in margins, leading to net income advancing to 17.0million,upfrom17.0 million, up from 17.0million,upfrom14.7 million last year. On a per-share basis, net income came in at 0.71,comparedto0.71, compared to 0.71,comparedto0.61 last year.

Fortitude Gold estimates that its annual gold production will be maintained close to 40K ounces well through 2028. Thus, excluding any potential acquisitions, the company’s medium-term results will mostly be determined by the underlying gold prices and modest expansions at existing mines. As a result, record gold prices and operating efficiencies could boost the company’s bottom line.

FTCO pays its dividends monthly and has a very high current yield of around 10%.

Gold Stock #3

Royal Gold (RGLD) was initially an oil and gas exploration and production company. However, the company switched gears and focused on acquiring and managing precious metal royalties and streams, with a special emphasis on gold by the late 1980s.

The company’s royalty and streaming business truly sets it apart from many of the names in the precious metal space. Royal Gold’s streaming contracts stipulate that it has the right to purchase all or a portion of metals produced from a mine at a price already determined for the life of the contract. This allows the company to benefit from high demand, and thus higher production, of gold while limiting downturns in the market when investors have soured on the precious metal.

On February 14, Royal Gold reported results for the fourth quarter of 2023. The company posted adjusted net income of 0.95perdilutedsharecomparedto0.95 per diluted share compared to 0.95perdilutedsharecomparedto0.91 in Q4 2022. The company ended the period with a net debt to trailing twelve months adjusted EBITDA of 0.30X, with 104millionofcashandequivalentsandtotalavailableliquidityofroughly104 million of cash and equivalents and total available liquidity of roughly 104millionofcashandequivalentsandtotalavailableliquidityofroughly845 million.

Management announced it plans to provide full-year 2024 guidance in the second quarter of 2024, but expects stream segment sales of 47,000 to 52,000 gold equivalent ounces in Q1 2024.

Royal Gold measures its growth using adjusted net income per share, which adjusts for fair value changes in equity securities, gain or losses on sales of project interests, and discrete tax benefits. Results have been somewhat choppy over the last decade but long-term, the adjusted net income trends upwards. In the last 10 years, adjusted net income per share grew 15.6% on average and in the last five years it grew by 14.9% on average.

Revenue growth is expected to come from Royal’s newest producers, Bellevue, and King of the Hills. New revenue should also come from development projects moving into production, such as Goldrush, Mara Rosa, Manh Choh, and Côté Gold. An increase in precious metals prices would also naturally support organic growth within the company’s streams and royalty portfolio.

Royal Gold's projected dividend payout ratio for this year is just 38%.

RGLD stock has a current yield of 1.4%.

At the time of publication, Ciura had no positions in any stocks mentioned.