by Fred Fuld III
Investing in gold mining stocks that pay dividends offers a compelling blend of income generation and exposure to the precious metals market. Unlike physical gold, which does not yield income, dividend-paying gold miners provide regular cash payouts, making them attractive to income-focused investors. Additionally, these stocks often exhibit leverage to gold prices, potentially amplifying returns during bullish market conditions. These stocks have historically been considered great inflation hedges.
Let’s explore four notable dividend-paying gold mining stocks: AngloGold Ashanti Plc (AU), Centerra Gold Inc (CGAU), Caledonia Mining Corporation Plc (CMCL), and Gold Fields Ltd (GFI).
AngloGold Ashanti Plc (AU)
AngloGold Ashanti, a prominent global gold producer, headquartered in the UK offers investors a semi-annual dividend, with a current yield of approximately 2.08% and a projected forward yield of over 5%. The company has demonstrated a commitment to returning value to shareholders, with a payout ratio of 39.06%, indicating a balanced approach between rewarding investors and retaining earnings for growth. AngloGold’s diversified portfolio of mining assets across multiple continents positions it well to capitalize on favorable gold market dynamics.
Earnings per share spiked 126% this year on a 26% rise in revenues over last year. The stock trades at a trailing price to earnings ratio of 19, and a forward P/E of 8.5. The price to earnings growth ratio is a very favorable 0.80.
Centerra Gold Inc (CGAU)
Centerra Gold, a Canadian-based miner, provides a quarterly dividend, yielding around 2.9% with a projected forward yield of 3.1%. The company’s consistent dividend payments reflect its stable operational performance and prudent financial management. With a payout ratio of 56.75%, Centerra balances shareholder returns with reinvestment in its operations. The company’s assets in North America and Asia offer geographical diversification, potentially mitigating region-specific risks.
Earnings per share growth this year were 12.8% on a slight drop in revenues for the year over last year. The stock is selling for 87% of book value and has a reasonable price to sale ratio of 1.25. One factor that the company has going for it is an extremely low amount of debt, with a debt to equity ratio of 0.01.
Caledonia Mining Corporation Plc (CMCL)
Caledonia Mining, another UK headquartered company, stands out with a robust dividend yield of approximately 3.2% , making it an attractive option for income-oriented investors. Operating primarily in Zimbabwe, the company has maintained strong financial performance, supported by its flagship Blanket Mine. Caledonia’s commitment to shareholder returns is evident in its consistent dividend payments, even as it invests in expansion projects like the Bilboes gold project.
The stock has an excellent PEG ratio of 0.88, with strong earning per share growth of 97.8%, on a 29.7% sales growth. Quarterly earnings growth year-over-year was an incredible 318%.
Gold Fields Ltd (GFI)
Gold Fields based in South Africa, one of the world’s largest unhedged gold producers, offers a semi-annual dividend with a yield of approximately 2.4% and a projected future dividend yield of 4.5%. The company’s diversified operations across South Africa, Ghana, and Australia provide a solid foundation for sustained performance. With a dividend payout ratio of 25.96%, Gold Fields demonstrates a conservative approach, ensuring ample reinvestment capacity while delivering shareholder value.
Earnings per share growth this year jumped 84%, on revenues of 13.4% growth year-over-year. This gives the shares an outstanding 0.76 PEG ratio. The trailing PE ratio is 17 with a forward PE of 8.
Conclusion
Dividend-paying gold mining stocks like AU, CGAU, CMCL, and GFI offer investors a unique combination of income and exposure to gold price movements. These companies’ commitment to regular dividend payments reflects their financial stability and operational efficiency. For investors seeking to diversify their portfolios with assets that can potentially hedge against inflation and economic uncertainty, while also providing income, these gold miners present compelling opportunities.
Disclosure: Author didn’t wn any of the above at the time the article was written.
