Mining stocks can help you gain exposure to commodities that are typically cyclical in nature. In 2023, equity investors are worried about rising interest rates and elevated inflation levels, which will likely act as headwinds for corporate earnings in the next 12 months.
As the macro environment is sluggish and consumer spending has pulled back, investing in quality gold mining stocks might make sense. Historically, gold has been viewed as a store of value and a hedge against inflation. Moreover, the yellow metal is inversely related to the equity market and interest rates.
Given these factors, here are two top TSX mining stocks you could buy today.
Agnico Eagle Mines stock
Valued at $23.5 billion by market cap, Agnico Eagle (TSX:AEM) is a senior gold mining company that produces precious metals. With operations in Canada, Mexico, Australia, and Finland, Agnico Eagle has a pipeline of high-quality exploration and development projects in these regions, as well as in the U.S. and Colombia.
Agnico Eagle has a strong track record of growing gold resources via exploration. For instance, its gold reserves stand at 24.1 million ounces, in addition to 30 million ounces of silver, 115,000 tonnes of zinc, and 85,000 tonnes of copper.
Agnico Eagle’s flagship LaRonde mine has produced 6.6 million ounces of gold since 1998 and remains a key driver of earnings and cash flow.
In the third quarter (Q3) of 2023, Agnico produced 850,000 ounces of gold, allowing it to generate $1.64 billion in sales, an increase of 13% year over year. Its net income more than doubled to $179 million in Q3, enabling further dividend hikes.
Agnico Eagle currently pays shareholders an annual dividend of $1.60 per share, indicating a dividend yield of almost 3.5%. Further, these payouts have doubled in the last 11 years. Priced at 20 times forward earnings, Agnico Eagle stock trades at a discount of 40% to consensus price target estimates.
Newmont Mining stock
Valued at $54 billion by market cap, Newmont Mining (TSX:NGT) is among the largest mining companies globally. Currently trading 56% below all-time highs, Newmont offers shareholders a tasty dividend yield of 4.7%.
Earlier this month, Newmont closed the acquisition of Newcrest, providing the combined entity with access to more than half of the world’s tier-one assets. Newmont’s portfolio of mining properties, long-life operations, and abundant exploration opportunities in favourable mining jurisdictions should allow it to benefit from economies of scale and consistent profit margins.
The acquisition will generate pre-tax synergies of US$500 million, which will be achieved within the first 24 months. Moreover, Newmont aims to save at least US$2 billion in costs through portfolio optimization in the next two years.
With balanced capital allocation priorities and an industry-leading dividend payout, Newmont has paid over US$5 billion in dividends in the last four years. Priced at 12.6 times forward earnings, Newmont stock is quite cheap, given analysts expect adjusted earnings to rise by 30% year over year in 2024.
Analysts remain bullish on the TSX stock and expect shares to surge over 120% in the next 12 months.
