Turn Market Fears into Profits With These 3 Gold Dividend Stocks

At first glance, the idea of gold dividend stocks to buy might seem unusually risky. For one thing, the experts don’t seem to like it. Perhaps rather infamously, John Maynard Keynes called the gold standard “a barbarous relic.” The Oracle of Omaha Warren Buffett stated that gold is “forever unproductive.” On the other hand, the precious metal deserves respect as a universal safe-haven asset.

Essentially, when the brown matter hits the proverbial fan, people tend to rush toward the yellow metal. Thanks to its intrinsic value and global recognition, the commodity makes for a solid backup plan. Even better, investing in gold dividend stocks presents the best of both worlds: you may enjoy some of the benefits of the fear trade while accruing passive income.

As well, safe-haven gold stocks offer a convenient alternative to storing and securing physical bullion. Plus, you’re ultimately invested in a business enterprise as opposed to just a “dumb” commodity. And on that note, below are the top gold stocks for dividends to consider.

Royal Gold (RGLD)

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A precious metals streaming and royalty company, Royal Gold (NASDAQ:RGLD) doesn’t participate in the traditional production business. Instead, it provides upfront capital to mining operators in exchange for a fixed percentage of generated revenue (royalty) or an agreed-upon portion of the actual metal production (streaming). By going the royalty/streaming route, Royal enjoys superior pricing predictability. Thus, it’s a great starting point for gold dividend stocks to buy.

To be fair, those acquiring gold stocks for market fears can see more generous payouts than Royal provides. At the moment, it carries a forward yield of 1.32%, below the materials sector’s average yield of 2.82%. However, the payout ratio sits at a lowly 35.2%. Therefore, investors will likely not have to worry about yield sustainability.

Turning to Wall Street, analysts peg RGLD as a consensus moderate buy. This assessment breaks down into three buys, two holds, and one sell. Overall, the experts’ average price target lands at $140.33, implying nearly 24% upside potential. Those investing in gold dividend stocks should find RGLD a stable if not somewhat boring idea.

Barrick Gold (GOLD)

The word

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Dialing up the risk-reward factor for gold dividend stocks to buy, Barrick Gold (NYSE:GOLD) offers a traditional mining business. According to its public profile, Barrick produces gold and copper with 16 operating sites in 13 countries. Presently, GOLD carries a market capitalization of just a bit under $29 billion. However, it’s a bit on the choppy side, shedding over 7% of equity value since the beginning of this year.

Still, it’s worth investigating for those with a long-term approach to safe-haven gold stocks. Right now, Barrick features a forward yield of 2.42%. Moreover, the payout ratio is quite low, sitting at 34.42%. Thus, investors should be able to sleep comfortably regarding yield sustainability. However, unlike Royal Gold’s 21 years of consecutive dividend increases, Barrick is starting its trend from zero. That’s one risk factor to keep in mind.

Nevertheless, the experts on the Street don’t seem to mind, pegging GOLD as a consensus strong buy. This assessment breaks down as eight buys, one hold and zero sells. Further, the average price target clocks in at $23.56, implying nearly 43% upside potential. Therefore, it’s one of the top gold stocks for dividends (and capital gains).

Sibanye Stillwater (SBSW)

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Arguably one of the riskiest ideas for gold dividend stocks to buy, South Africa’s Sibanye Stillwater (NYSE:SBSW) warrants caution. Since the start of the year, SBSW gave up almost 38% of its equity value. Since hitting a weekly average closing price of $20.56 on April 16, 2021, shares have failed to generate sustained traction. At the moment, the security trades hands at less than $7.

Some of the problems center on fundamental issues, such as labor disputes. Given the speculative nature of Sibanye, it entices investors with a forward yield of 7.89%. That’s well above the materials sector’s average yield of 2.82%. Also, the payout ratio isn’t too shabby at 48.18%. However, with a lack of a current track record regarding dividend increases, SBSW is a gamble.

If you do want to roll the dice, note that two analysts regard Sibanye quite highly, pegging it a consensus buy. As well, their average price target stands at $12.50, implying over 85% upside potential. Again, if you want to gamble on gold stocks for market fears, SBSW may be calling your name.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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