3 Top Dividend Stocks for Rising Gold Prices

Gold can be an excellent hedge against inflation. Typically, gold is inversely valued against the U.S. dollar. When inflation runs high, investors might consider purchasing precious metals, such as gold.

In fact, gold prices recently hit a record price above $2,700 per ounce. Gold spot prices are currently at just over $2,600 per ounce, up 30% in the past 12 months.

For investors looking for more from their gold positions, such as dividend income, owning gold stocks can be a way to generate income while countering inflation.

Let's examine three of our top gold stocks right now.

Newmont Corp.

Newmont Corp. NEM operates gold and copper mines on four different continents. The company was founded in 1916 as a holding company for investments in mineral, oil and gas properties. It has been listed on the NYSE since 1940. Newmont completed its merger with Goldcorp in April 2019, creating the world’s largest gold producer by market value, output, and reserves.

Newmont’s earnings per share have been highly volatile in the past, which is not surprising, as mining companies generally have wild swings in profitability due to their exposure to commodity prices. However, based on current forecasts, Newmont could see higher earnings thanks to strong tailwinds from a high gold price.

On October 23, NEM reported quarterly revenue of $4.61 billion which slightly missed analyst estimates by $64.6 million. Adjusted EPS were $0.81 per share. Gold production increased 4% quarter over quarter. Newmont delivered 2.1 million gold equivalent ounces and generated $760 million in free cash flow.

Newmont should achieve earnings growth through the development projects it has in the pipeline right now. As those projects come online, the additional production volumes should drive efficiencies, which will result in declining unit costs.

Newmont’s biggest advantage is its enormous scale, as it is one of the largest gold producers in the world, which allows for cost advantages over smaller peers. On top of that, the company is financially flexible. Many miners are overly leveraged, which hampers their growth opportunities, but Newmont has no such problem.

With a 2024 dividend payout expected to be under 40%, NEM stock has a secure dividend payout with room for dividend increases. 

NEM stock currently yields 2.4%.

Fortitude Gold

Fortitude Gold Corp. FTCO was spun off from Gold Resource Corp. into a separate public company in December 2021. Fortitude Gold 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.

The company generated $73.1 million in revenues last year, almost the majority of which were from gold, and is based in Colorado Springs, Colorado. It pays dividends on a monthly basis. Shares are trading over the counter (OTC) and are not listed on a major exchange.

On November 5, Fortitude Gold released its Q3 results for the period ending September 30, 2024. For the quarter, revenues came in at $10.2 million, 52% lower compared to last year. The decline in revenues was primarily due to a 62% drop in gold sales volume and a 54% decrease in silver sales volume.

However, these reductions were partially offset by a 26% increase in gold prices and a 23% rise in silver prices. Moving to the bottom line, the company recorded a mine gross profit of $4.8 million compared to $11.8 million last year due to lower net sales. Therefore, the company reported a net income of just $946,000 versus a net income of $5.7 million last year.

Fortitude Gold estimates that its annual gold production will be maintained close to 40K ounces well through 2028. 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 with a very high current yield of 9.1%.

Royal Gold

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 Royal Gold 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 November 6, Royal Gold reported results for the third quarter of 2024. The company reported net income of $1.46 per diluted share compared to $0.75 in Q3 2023. It ended the period with $128 million of cash and equivalents and total available liquidity of roughly $1.1 billion. Royal Gold paid off $50 million of debt in the quarter, and now has no debt remaining. Leadership expects Royal Gold to sell 215K to 230K oz of gold, 3.2M to 3.8M oz of silver, and 14M to 16M lb of copper in 2024.

Revenue growth is expected to come from Royal’s newer producers, Manh Choh, Côté Gold, Mara Rosa, Bellevue, and King of the Hills. New revenue should also come from development projects moving into production, such as Back River and Great Bear.

The company is active in making acquisitions, such as the Red Chris Mine royalty and NX Gold Mine (now Xavantina) gold stream acquisitions in August 2021. And in July and August 2022, Royal Gold acquired Great Bear Royalties Corporation. An increase in precious metals prices would also naturally support organic growth within the company’s streams and royalty portfolio.

Royal Gold has a projected dividend payout ratio for this year is under 40%. The company has increased its dividend for 23 consecutive years.

RGLD stock is currently yielding 1.2%.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider FTCO to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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