4 Dividend-Paying Gold Stocks to Purchase to Hedge Against a Market Crash

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dividend paying gold stocks to purchase to hedge against market crash

Four dividend-paying gold stocks to purchase to hedge against a market crash include stable mining corporations that currently are undervalued and overlooked by many investors.

The United States market continues its bull run with an air of instability. The value of stocks keeps going up, and while investors can speculate what the next bubble is, they have no idea when, or if, it is going to pop.

Wise investors might consider gold an effective vehicle to hedge their portfolios against a possible market crash. Even in strong bull runs, some experts suggest investors have 5-10% of a given portfolio invested in gold. A key reason is that gold acts as an insurance policy for a portfolio, since when everything else goes down, gold tends to go up.


Gold is unlikely to produce spectacular returns, but it is highly effective at minimizing the downside in the event of a bubble popping, a geopolitical crisis, or some other market catastrophe. That said, the dollars invested in gold ideally also can earn money through dividend payouts.

That’s why we compiled a list of the best four dividend-paying gold stocks to purchase to hedge against a market crash. Investing in these gold stocks is a hedge for the rest of your portfolio while simultaneously earning a passive income through dividend distributions.

Here are the four dividend-paying gold stocks to purchase as hedges against a market crash:


4 Dividend-Paying Gold Stocks to Purchase as a Hedge Against a Market Crash


#1: Newmont Corporation (NYSE:NEM)

Dividend Yield: 3.6%

Newmont (NYSE:NEM) is the largest gold-producing company in the world. Based out of Denver, Colorado, the company mined nearly 6 million ounces of gold in 2020, setting a new record it intends to break in 2021. Newmont projects it will produce 6.7 to 7 million ounces of gold this year while reducing costs to $800 per ounce.

The company has done a stellar job rewarding shareholders in the last several years, returning more than $2.5 billion to investors since 2019 through stock buybacks and dividends. Newmont paid its first quarterly dividend in 1934 and has never skipped a payout. Its most recent dividend of $0.55 per share was paid on March 18, 2021. That payout marked a sharp increase from the $0.25 and $0.14 dividends it was provided in 2020 and 2019.

This dividend payout brings Newmont’s forward dividend yield to 3.6% (the highest among our foursome featured in this write-up). It has increased its dividend distribution by an average of 85.6% in the trailing five years.

As the only gold company in the S&P 500, Newmont has seen remarkable growth in its share value in the recent past as well. In the trailing 12 months, NEM grew 49.4%. In the last five years, it rose 140.4%. Despite this astonishing growth, a discounted cash flow (DCF) analysis through our affiliate partners at Stock Rover values the company at $73.18, 20% higher than its current trading price of $60.92.


4 Dividend-Paying Gold Stocks to Purchase as a Hedge Against a Market Crash

#2: Barrick Gold (NYSE:GOLD)

Dividend Yield: 1.7%

Barrick Gold (NYSE:GOLD) is a Toronto-based mining company with operations in North America, South America, Australia and Africa. In 2020 alone, the firm mined nearly 5 million ounces of gold and 500 million pounds of copper. Its gold reserves number nearly 70 million ounces of proven and probable gold.

Barrick Gold stands out among other gold companies in the identity of its investors. Berkshire Hathaway (NYSE:BRK-A) recently purchased 2 million shares of the company — a surprising and telling decision, as Warren Buffett has spoken against gold as an investment for years.

The company pays a quarterly dividend of $0.09 per share, a gradual increase from the $0.07 payout it was distributing at the beginning of 2020. In the last three years alone, Barrick Gold has increased its dividend by 44.2%, bringing its currently forward yield to 1.7%.

The stock has returned 30.6% in the last year and 48.4% in the last five years. Like Newmont, the previous entry on our list, Barrick Gold has shown stellar growth that is unusual for the gold industry, but the stock still remains undervalued. Stock Rover’s DCF analysis values the shares at $25.42, 23% higher than the $20.70 value it trades at now. Analysts are more bullish still, with the average target price among investors hitting $30.44.


4 Dividend-Paying Gold Stocks to Purchase as a Hedge Against a Market Crash

#3: Agnico Eagle Mines (NYSE:AEM)

Dividend Yield: 2.3%

Agnico Eagle Mines (NYSE:AEM) operates a chain of mines in Mexico, Finland and Canada. In 2008, the company operated a single mine before quickly acquiring more property and companies to expand its production over the last 13 years. Agnico produced 1.7 million ounces of gold in 2020 and differentiates itself from other gold companies in its focus on areas with low-risk jurisdictions.

The growth of Agnico Eagle Mines once again exceeds the expectations most investors have of gold — the company’s share price has increased by 57.9% in the trailing 12-month period and shows signs of continuing improvement. With an earnings per share (EPS) of $2.63, Agnico is in the 92nd percentile for EPS in its industry. It also outshines its peers in operating income, earnings before interest, taxes, depreciation and amortization (EBITDA), as well as revenue.

Agnico pays a quarterly dividend of $0.35 per share, up 75% from the $0.20 dividend it paid at the beginning of last year. Its dividend has grown an average of 47.1% every year for the past three years. This sharp increase has occurred largely alongside share growth, meaning the yield has remained close to the current 2.3%.

The company has grown 57.8% in the last year alone. According to a discounted cash flow (DCF) analysis using Stock Rover, the company remained undervalued. Agnico Eagle Mines has a fair value 8% higher than its current trading price — $65.21 vs. $60.40, respectively. Investors are even more bullish on the stock, with the average target price for analysts coming in at $87.56, a whopping 44.39% higher than the company’s latest closing price.


4 Dividend-Paying Gold Stocks to Purchase as a Hedge Against a Market Crash

#4: B2Gold Corp (AMEX:BTG)

Dividend Yield: 3.4%

B2Gold Corp (AMEX:BTG) is a gold mining company with mines in three countries and exploration projects in Nicaragua, the Philippines, Namibia, Mali and Burkina Faso.

The latest BTG share price of $4.68 has a price-to-book ratio of 2.3, compared to the average metals and mining stock price-to-book ratio of 2.7. The company is a new dividend payer and shared its first dividend of $0.01 per share in 2019. It has paid a dividend every quarter since and grown its dividend 400% to the current distribution of $0.04 per share. This distribution annualizes to an annual dividend of $0.16 and a forward yield of 3.4%.

B2Gold has an average revenue growth rate of 36.4% per year, making it the fourth-fastest growing company in the entire mining industry. This growth, coupled with an EBITDA in the 99th percentile, led to B2Gold’s share price rising 58.8% in the last year and 195.8% in the last five years.

A DCF analysis, using Stock Rover, estimates B2Gold has a fair value of $5.95, which is 27% higher than its latest closing price of $4.68. Analysts are even more optimistic, with the average target price for BTG at $8.17, a spectacular 74.62% above the current value. Both of these valuations tell us B2Gold is significantly undervalued and is trading at a major bargain.


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Jonathan Wolfgram

Connect with Jonathan Wolfgram

Jonathan Wolfgram
Jonathan Wolfgram is an investment analyst who writes website content at Eagle Financial Publications. He graduated from the University of Minnesota with Bachelor’s degrees in Finance and Philosophy. Jonathan writes for www.DividendInvestor.com and www.StockInvestor.com.
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