Gold prices are on the upswing this week, with the December futures contract (GCZ23) peaking at a two-month high above $2,000 an ounce this morning as investors increasingly seek out safe havens amid mounting geopolitical tensions and soaring bond yields. Frequently, gold prices and the performance of equity markets are inversely related, and the yellow metal can deliver outsized returns amid periods of economic recession.
Viewed as an alternative asset class, a store of value, and a hedge against inflation, gold can provide your investment portfolio with diversification. One way to gain exposure to gold is by investing in gold mining stocks. With this in mind, here are three high-yield gold mining stocks to consider as gold futures test their footing around the closely watched $2,000 level.
Agnico-Eagle Mines
Valued at a market cap of $24.6 billion, Agnico Eagle Mines (AEM) is involved in the exploration, development, and production of precious metals. Its mines are located in Canada, Australia, Mexico, and Finland, with exploration and development activities in the Americas, Europe, and Australia.
AEM has increased the number of operating mines from one in 2005 to 11 in 2023, and its gold production has increased from 240,000 ounces to 3.34 million ounces in this period. Due to its widening portfolio of cash-generating assets, Agnico-Eagle currently pays shareholders an annual dividend of $1.60 per share, translating to a yield of 3.22%. Its dividend stood at just $0.03 per share in 2005, which suggests these payouts have risen by 24% annually in the past 18 years.
Agnico Eagle stock has returned 137% to shareholders in the past decade, and is up close to 400% since October 2003, after adjusting for dividends. Priced at 22 times forward earnings, AEM is not too expensive. Notably, the company is set to report quarterly earnings next week.
Out of the 13 analysts covering AEM, nine recommend “strong buy,” three recommend “moderate buy,” and one recommends “hold.” The average target price for AEM stands at $66.55, which is 32% above current trading prices.
Newmont Mining
Valued at $31.3 billion by market cap, Newmont Mining (NEM) is engaged in the production and exploration of gold. It also explores metals such as copper, silver, lead, and zinc. With operations and assets located in the U.S., Canada, Argentina, Chile, Ghana, Australia, Mexico, Peru, and the Dominican Republic, Newmont is one of the largest mining companies globally. It ended 2022 with proven and probable gold reserves of 96.1 million ounces and a land position of 61,500 square kilometers.
Down 51% from all-time highs, Newmont stock currently offers shareholders a dividend yield of 4.44%. Armed with Tier 1 assets in favorable mining jurisdictions, Newmont is positioned to deliver stellar returns to long-term investors.
NEM is priced at 20x forward earnings, and is forecast to increase adjusted earnings from $2.50 per share in 2022 to $3.51 per share in 2024. The company's latest quarterly results will be released in less than a week.
Out of the 16 analysts covering NEM, nine recommend “strong buy,” one recommends “moderate buy,” and six recommend “hold.” The average target price for NEM stands at $55.20, which is 40% above current trading prices.
Barrick Gold
The final mining stock on my list is Barrick Gold (GOLD), valued at $29.1 billion by market cap. Despite a challenging macro environment, Barrick Gold increased operating cash flow profit by 7% year over year in Q2 2023, on the back of higher production and higher gold prices.
Barrick Gold pays investors an annual dividend of $0.90 per share, indicating a yield of 5.44%. These payouts have increased by 27% annually in the last five years.
In recent years, Barrick Gold has sold non-core assets to lower balance sheet debt, helping to insulate the company from recent interest rate hikes. Priced at 19x forward earnings, GOLD is forecast to increase earnings by 12% in 2023 and 38% in 2024.
Out of the 16 analysts covering GOLD, eight recommend “strong buy,” three recommend “moderate buy,” and five recommend “hold.” The average target price for GOLD stands at $22.85, which is 34% above current trading prices.
