Gold futures (GCQ24) have surged to record highs in 2024, with the August-dated contract hovering less than 5% away from its late May peak. The precious metal has been catapulted higher by global central bank buying, as well as its status as an inflationary hedge amid stubborn price pressures.
Bart Malek, head of commodity strategy at TD Securities, recently wrote that he thinks gold will be well-supported this summer. However, the analyst says no breakout rally is expected in the short term, even while supportive factors remain in place for the precious metal.
In this scenario, one way for investors to take advantage is by picking up shares of low-priced gold mining stocks with high dividend yields. These stocks offer steady passive income, along with the potential for capital appreciation when gold prices take off on their next leg higher.
So, are these high-yield gold mining stocks the right addition to your portfolio this summer? Keep reading to find out more about their potential and why they might be worth considering.
Gold Mining Stock #1: B2Gold Corp
B2Gold Corp (BTG) is mining name known for its low-cost operations and solid financial performance. Based in Vancouver, Canada, B2Gold operates gold mines in Mali, Namibia, and the Philippines. With a market cap of $3.56 billion, the company reported fiscal year 2023 revenue and net income of $1.93 billion and $10 million, respectivelyr.
BTG offers an annualized dividend of $0.16 per share, which translates to a forward dividend yield of 5.8% at current levels. They pay dividends quarterly, with the next ex-dividend date on June 11.
Shares of BTG are down 28% over the last 52 weeks, but the stock has rallied more than 17% since hitting a multi-year low of $2.34 in late February.
From a valuation perspective, BTG is trading at a forward P/E ratio of around 11.58x, which is reasonable for a gold miner. That's cheaper than its historical average of 12.35x, and the industry average north of 17x.
Fundamentally, B2Gold has significant initiatives like the Goose Project in Nunavut, Canada, on track for mill completion in early 2025. This project is expected to add 150,000 ounces of gold production to the life of the mine plan, boosting B2Gold's production profile.
B2Gold reported adjusted earnings per share (EPS) of $0.06 in its Q1 2024 earnings report, beating analysts' estimates of $0.05. The company generated $461 million in revenue, slightly below expectations, and produced 214,339 ounces of gold, down 14.5% year-over-year. Despite rising costs, the better-than-expected EPS was a positive catalyst for the stock in early May.
Analysts are optimistic about B2Gold stock, which has a “strong buy” consensus and an average target price of $4.20 - suggesting a potential upside of around 52.7%. Out of 13 analysts, 9 recommend a “strong buy,” 2 suggest a “moderate buy,” and 2 advise holding the stock.
Gold Mining Stock #2: Caledonia Mining Corporation
Caledonia Mining Corporation (CMCL) is a gold mining company focused on Southern Africa, with its main asset being the Blanket Mine in Zimbabwe. With a market cap of $133 million, Caledonia also operates other mining claims in the region, including the Bilboes and Motapa projects. Known for its strong production capabilities and strategic growth initiatives, Caledonia has been a consistent performer in the gold mining sector.
One of the big draws for Caledonia Mining is its solid dividend yield. CMCL offers a quarterly dividend of $0.14 per share, giving it an annualized yield of about 5.39%.
The stock is down 14% YTD, but - similar to BTG - Caledonia shares have rallied more than 17% off their 52-week lows, set in early March.
The company recently announced a preliminary economic assessment for the Bilboes sulphide gold project, which could triple its production capacity to over 200,000 ounces per year when combined with production from the Blanket Mine. This project will need peak funding of $309 million, mostly through debt, and is a key part of Caledonia's strategy to become a multi-asset gold producer in Zimbabwe.
In its Q1 2024 earnings report, Caledonia posted earnings per share (EPS) of $0.26, beating analysts' estimates. The company generated $38.53 million in revenue for the quarter, up 31% year-over-year, and achieved record gold production of 16,000 ounces at the Blanket Mine. This marks a significant turnaround from the previous year, where the company reported a net loss.
With only one analyst offering up a recommendation on Caledonia Mining stock, it's a “strong buy” with a target price of $13.50, indicating a potential upside of approximately 30%.
Conclusion
Both B2Gold Corp (BTG) and Caledonia Mining Corporation (CMCL) offer some pretty enticing opportunities for investors to add some low-priced gold exposure this summer. With their high dividend yields and strong growth prospects, these stocks could be great additions to your portfolio. With analysts forecasting more upside to come in precious metals prices, these two gold dividend stocks might be worth a closer look.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.