Sometimes even safe-haven assets have a bad day, with gold futures (GCZ24) getting caught up in Monday's broader global rout to settle about 1% lower. But looking at the bigger picture, it's hard to find a more reliable investment than good old-fashioned gold, which has been blazing to new highs this summer amid expectations for an upcoming Fed rate cut to weigh on the U.S. dollar. And that's just one catalyst that could push the precious metal higher; central banks have also been stockpiling gold, and the technical trend remains firmly higher, as well.
In fact, with gold catching strays amid indiscriminate selling, now is a perfect time for investors to check out the opportunities in gold stocks that pay dividends, for a compelling combination of growth and steady investment income. Two top picks among analysts are Centerra Gold (CGAU) and Barrick Gold (GOLD) - a pair of top-quality stocks that offer exposure to higher gold prices, along with dividend yields over 2%.
Let's take a closer look at what they've got going for them in today's market.
Centerra Gold Inc. (CGAU): A Steady Performer with Attractive Dividends
Centerra Gold (CGAU) is a Canadian gold mining and exploration company that's making moves across North America and Asia. Centerra is all about sustainable mining and maximizing shareholder value through smart operations, strategic buys, and solid financial management.
CGAU stock has gained just 2.8% over the past 52 weeks, and 3.7% YTD. That means the mining stock has some room to catch up with gold's price outperformance.
With a market cap of around $1.43 billion, this small-cap player is valued at a forward P/E of 9.86. That's a healthy 38% discount to the sector median, suggesting Centerra's stock is fairly priced at current levels.
Plus, the company's annual dividend yield is a sweet 3.02%, with the most recent quarterly payout totaling C$0.07 per share, or about $0.05 on this side of the border.
Operationally, Centerra reported solid results for the second quarter of 2024. Net earnings came in at $37.7 million, or $0.18 per share, while adjusted net earnings were $46.4 million, or $0.23 per share. Gold production for the quarter totaled 89,828 ounces, with Mount Milligan contributing 38,609 ounces and the Öksüt mine in Turkey adding 51,219 ounces.
Looking ahead, Centerra has a few interesting growth prospects in the pipeline. The company is working on a feasibility study for restarting the Thompson Creek molybdenum mine and optimizing its Langeloth metallurgical facility. Additionally, Centerra expects to publish an initial resource estimate for its Goldfield project by the end of 2024, followed by a preliminary economic assessment in 2025.
Analysts are giving CGAU a thumbs-up, with a consensus "moderate buy" rating. Out of 11 analysts, five say "strong buy," four say "moderate buy," one says "hold," and one says "moderate sell." The average target price is $8.82, indicating a potential 42.7% upside from the current price.
Barrick Gold Corporation (GOLD): A Giant in the Gold Industry with Reliable Yields
Barrick Gold (GOLD) is a big player in the gold mining game, with operations spanning North and South America, Africa, and Australia. Barrick's all about sustainable mining, smart acquisitions, and running a tight ship to keep shareholders happy.
With a market cap of around $31.4 billion, industry giant GOLD is down 5% on a YTD basis, narrowing its 52-week return to just 4.2%.
Valued at a forward P/E of 14.67, Barrick looks like a bargain compared to the sector median, as well as its own historical valuations. This suggests now could be a good time to scoop up the gold stock at a discount - especially when you factor in the company's growth prospects and generous dividend yield, clocking in at 2.23%. The most recent quarterly payout was $0.10 per share for Q1 2024.
In Q1 2024, Barrick knocked it out of the park with net earnings of $295 million, or $0.17 per share, a massive jump from $120 million, or $0.07 per share, in the same quarter last year. Adjusted earnings per share hit $0.19, beating analysts' expectations. Barrick's success was fueled by higher gold prices and operational improvements.
Looking ahead, analysts are stoked about Barrick's Q2 2024 prospects. They're expecting earnings of $0.26 per share, up from $0.19 in the same quarter last year. This projected growth is backed by Barrick's preliminary Q2 production report, which showed a jump to 948,000 ounces of gold and 43,000 tonnes of copper.
Barrick's strong earnings and cash flow are fueling its dividend policy and share buyback program, with the green light to snap up $1 billion of its own shares over the next 12 months. On top of that, its exploration deal with Geophysx Jamaica Ltd. gives Barrick access to around 4,000 square kilometers of land in Jamaica. This agreement sets Barrick up to potentially snag an 80% joint-venture interest in certain properties, tap into Geophysx's local know-how, and boost current production levels.
Analysts are all-in on Barrick, giving it a consensus "strong buy" rating. Out of 17 analysts covering the stock, 11 say "strong buy," two say "moderate buy," and four say "hold." The average target price is $22.16, indicating an expected 29% upside from the current price.
The Bottom Line on These Gold Dividend Stocks
In a market where investors are seeking both capital appreciation and income, dividend-paying gold stocks like Barrick Gold Corporation (GOLD) and Centerra Gold Inc. (CGAU) present attractive opportunities. As we've seen, both companies boast strong financial performances, consistent dividend histories, and positive analyst outlooks. With gold prices showing resilience and the potential for further gains, these stocks could be valuable additions to a diversified portfolio.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
