Due to market uncertainty, interest rate fluctuations, and a few other reasons, investors are flocking to a safe-haven investment like gold.
This has already pushed the metal to a three-month high price point. This has triggered a bullish phase in gold mining stocks (and royalty stocks) that you might consider capitalizing upon.
Kinross Gold
Kinross Gold (TSX:K) is one of the ten largest gold producers around the globe. It operates primarily in the Americas, with one operation in Africa (Mauritania), but the portfolio has ample geographic diversity.
The company produced about 2.1 million ounces of gold in 2023. Its reserves include 22.8 million ounces proven & probable and 26 million ounces measured & indicated, which means that at its current output level, the company can keep producing for at least one and easily two or more decades, even if it doesn’t explore any new reserves.
The stock is currently heavily discounted — about 45% down from its five-year peak and modestly valued. The discount hasn’t done much to improve its yield, which is currently at just 2.3%. Still, it can be a powerful growth facilitator now that the company has started riding the bullish momentum, assuming it continues for a long time.
B2Gold
Even though the $4.68 billion market cap doesn’t endorse this status with a strong conviction, B2Gold is a senior gold producer. Its 2023 output was over a million ounces, and it’s expected to rise to around 1.3 million ounces in 2024.
It has a solid global portfolio, producing mines in Africa and Asia and undertaking development/exploration projects on three other continents. B2Gold markets itself as a low-cost gold producer.
The stock has fallen hard from its 2020 (post-pandemic peak) and is currently trading at a 61% discount. Its valuation is dangerously high as well, but there are two reasons to consider this stock right now.
First, it’s climbing quite rapidly under the positive influence of rising gold prices, even compared to other gold stocks. The second reason is its generous dividend yield of 6%, which will go down proportionally to the stock growth. So, now is as good a time as any to try to get the best of both worlds from this stock.
Franco-Nevada
While it’s not technically a mining stock, Franco-Nevada (TSX:FNV) still benefits from the upward price trend of gold. The stock has experienced a sharp rise of over 7% in the last week alone, and it may continue (albeit at a more measured pace) if the gold demand and prices keep on rising.
As one of the largest gold royalties and streaming companies in the world, Franco-Nevada has a definitive edge over its mining peers. It’s safer and sheltered from price fluctuations, which is one of the reasons why its 27% discount from the five-year peak is quite modest compared to the other stocks on this list. It’s also a well-established Dividend Aristocrat, but the yield isn’t quite attractive at 1.2%.
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Foolish takeaway
The three stocks are already benefiting from gold’s bull market phase, and their upward climb may continue if the gold prices keep rising at quite a compelling pace. You can buy now and lock in a good yield (from the stock’s historical yield perspective) since all three stocks are still heavily discounted. Or you can play it safe and see how long the upward price trend continues.
