Gold futures have broken out in the post-holiday trading week, as the precious metal catches a boost from a softer U.S. dollar and cooling Treasury yields. As a result, December-dated gold (GCZ23) extended its lead above the psychologically significant $2,000 level on Monday, and tapped its highest price since May.
In today's session, the positive momentum is continuing, with gold futures up 0.6% in early trading to hover around $2,025.
With the precious metal surging higher, gold stocks are also catching fresh attention from investors. Against this backdrop, here's a look at two dividend-paying gold stocks priced under $5 per share.
B2Gold Corp
Established in 2007, B2Gold (BTG) is a Canadian mining company that owns and operates gold mines in Mali, Namibia, and the Philippines. It is a low-cost international senior gold producer and has a strong pipeline of exploration and development projects that could further expand its production base. Its market cap currently stands at about $4.05 billion.
BTG stock is down 7% on a YTD basis, which has pushed its dividend yield up to 5.13% - well above the sector median of 2.3%.
The latest earnings results for Q3 2023 were mixed, as adjusted EPS fell short of expectations, even as revenue surpassed Wall Street's forecast. B2Gold reported revenues of $477.9 million in the quarter, up 21.7% from the prior year on gains in both the amount of gold sold (up 8.5% YoY) and produced (up 4.7% YoY).
Notably, even though adjusted EPS of $0.05 failed to surpass the consensus estimate of $0.06 by a whisker, the metric still clocked in a healthy growth of 66.7% from the year-ago period.
Meanwhile, the company's Goose Project in Nunavut, Canada remains on track to pour its first gold in Q1 2025. The Goose Project is a large, high-grade gold deposit. The current mineral resource estimate is 12.5 million ounces of gold, and the project offers the potential for significant expansion. Crucially, the structural steel for the mill building, powerhouse, and truck shop is already rising, and cladding on the mill building is over half done, while cladding for the powerhouse and truck shop has commenced. This proactive approach enables B2Gold to maintain production momentum through the harshest months, and supports the on-schedule completion of the mine.
In another development, B2Gold has permits still outstanding for Bantako North, which is expected to result in no production from Fekola Regional in 2023. However, the company is on track to build the necessary infrastructure by the year-end, and has received support from the Malian government to build the infrastructure for trucking ahead of the permit being granted.
Overall, analysts remain quite bullish on BTG stock, and have an average “Strong Buy” rating with a mean target price of $5.20. This denotes an upside potential of roughly 61.5% from current levels. Out of 10 analysts covering the stock, seven have a “Strong Buy," two have a “Moderate Buy,” and one has a “Hold” rating on the stock.
Sandstorm Gold
Another Canadian company operating within the precious metals industry - albeit in a different way - is Sandstorm Gold (SAND). It is a gold royalty company that provides funding to mining companies in exchange for royalties, principally in the form of net smelter returns and streams. Founded in 2008, Sandstorm Gold has a portfolio of over 250 royalties on mines around the world. Its market cap currently stands at $1.4 billion.
SAND stock is also trading down on a YTD basis in 2023, having shed 5.8%. The stock offers a dividend yield of 1.23%.
The latest earnings results for Q3 were in line with expectations, while revenue beat expectations. Sandstorm reported revenues of $41.3 million in the quarter, up 5.9% from the previous year. The company broke even on a per-share basis, while adjusted EPS of $0.01 matched Wall Street's forecast. Operating cash flow increased by 27% from the prior year to $31.9 million.
Looking into Sandstorm Gold's portfolio, the Greenstone project (in which SAND holds a 2.375% gold stream on the first ~120,300 ounces at 20% spot, stepping down to ~1.58% after) remains on schedule and is expected to contribute ~8,500 ounces in its five first full years of production to Sandstorm, translating to over $12 million in cash flow per year starting in 2025.
Next, the Platreef project is expected to begin first concentrate production in Q3 2024. Platreef is home to over 70% of the world's mined platinum, with an average reserve grade of 0.30 grams per tonne of gold out of a total reserve of about 125 million ounces. Sandstorm holds an initial 37.5% payable gold stream on Platreef until ~131,250 ounces have been delivered. The project is forecasted to generate upwards of $26 million per annum in cash flow for Sandstorm post-2030.
Lastly, Sandstorm has an option to purchase a 20% gold stream on the MARA Project that's been consolidated by Glencore into one of the largest and highest-grade undeveloped copper projects globally in Argentina. If exercises, Sandstorm will have access to about 525,000 ounces of gold.
On average, analysts have a “Strong Buy” rating for the gold stock, with a mean target price of $7.57 - denoting an upside potential of roughly 54% from current levels. Out of 10 analysts covering SAND, six have a “Strong Buy” rating, three have a “Moderate Buy," and one has a “Hold” rating.
