Do you want to invest in gold while also earning an income stream in the form of dividends? Dividend-paying gold stocks are an excellent option to consider.
Canada’s gold production in 2021 was approximately 170 metric tons across all Canadian mines.
Gold stocks within a portfolio can help you to weather difficult market conditions while a constant dividend stream will also allow you to earn steady returns in the form of income.
I will go over the best dividend-paying gold stocks in Canada below and outline some of their key characteristics.
Pros and Cons of Investing in Dividend-Paying Gold Stocks
Gold stocks have distinct qualities that set them apart from other stocks. These characteristics come with both advantages and disadvantages.
- A substantial dividend yield that can contribute to steady returns
- The potential for significant gains if gold prices rise and the company remains stable
- They are often established, large companies that trade at relatively lower price-to-earnings ratios.
- The price of gold needs to remain above a certain level for the company to remain profitable
- The risk of poor management practices, unsuccessful mining endeavors, or geopolitical tensions
- Gold stocks are typically more volatile than the price of physical gold
One of the key reasons for investing in gold stocks (especially instead of investing in gold directly) is that they can offer leverage exposure to the price of gold. Gold mining companies are typically highly dependent on high gold prices for strong operating results.
If gold prices are rising, you may see explosive growth across gold stocks. If the opposite is true, you may also find that gold stocks are quick to drop in price.
The Best Dividend-Paying Gold Stocks in Canada
1. B2Gold Corporation
- Ticker: BTO.TO
- Size: Mid Cap
- Valuation: Core
- Forward Dividend Yield: 4.05%
- Dividend Payout Ratio: 72.73%
- Dividend Yield (12-Month Trailing): 4.51%
- Upcoming Dividend Date: Dec 18, 2023
- Market Cap: $4.38 Billion
- Forward P/E Ratio: 12.96
B2Gold is a Canadian-based medium-sized gold mining company focusing on a limited number of operations. The firm operates in Mali, the Philippines, and Namibia and plans to expand into Colombia and Burkina Faso.
The goal of the company is to increase its gold production through exploration and acquisition.
B2Gold’s all-in sustainable cost of production is relatively low compared to similar companies.
Aside from trading on the Toronto Stock Exchange, the company is also publicly traded on the NYSE, with the ticker symbol BTG, allowing users to buy shares in US dollars.
B2Gold offers a solid dividend to investors and trades at a favourable valuation compared to many of its peers.
Sustainability is a key aspect of the company’s operations, as evidenced by its regular ESG reports. As a result of its concentrated operations in a few countries, investors need to monitor local political events.
B2Gold is a reasonably-valued stock to consider as a dividend-paying Canadian gold stock.
2. Franco-Nevada Corporation
- Ticker: FNV.TO
- Size: Large Cap
- Valuation: Growth
- Forward Dividend Yield: 0.99%
- Dividend Payout Ratio: 31.82%
- Dividend Yield (12-Month Trailing): 0.91%
- Upcoming Dividend Date: Mar 28, 2024
- Market Cap: $27.79 Billion
- Forward P/E Ratio: 31.86
Franco-Nevada is a Canadian-based, large-cap gold company that operates differently from traditional gold mining companies. Rather than actively mining gold or other metals, Franco-Nevada’s business model is based on royalties and streaming for both metal and oil and gas production.
The company pays an initial cash sum for a portion of future metal or resource output, which provides support to mining and oil and gas companies when launching or expanding their operations.
The majority of Franco-Nevada’s projects are located in the US, Canada, Peru, and Chile.
Franco-Nevada shares trade on the Toronto stock exchange as well as on the NYSE under the ticker symbol FNV.
Franco-Nevada shares do pay a dividend, although it is slightly lower than the average Canadian gold stock yield. Unlike most gold stocks, the lower yield also comes with a higher P/E multiple, making it a growth stock.
If you are a growth-oriented investor that wants to access a dividend-paying Canadian gold stock, Franco-Nevada is an excellent company to consider investing in.
3. Barrick Gold Corporation
- Ticker: ABX.TO
- Size: Large Cap
- Valuation: Core
- Forward Dividend Yield: 2.94%
- Dividend Payout Ratio: 45.79%
- Dividend Yield (12-Month Trailing): 2.02%
- Upcoming Dividend Date: Dec 15, 2023
- Market Cap: $33.67 Billion
- Forward P/E Ratio: 13.6
Barrick Gold Corporation is a massive Canadian mining firm specializing in gold and copper extraction. The company boasts a long history of being publicly traded and has established a considerable market capitalization, ranking as one of the largest gold companies in the world.
Barrick Gold maintains one of the lowest all-in-sustaining costs in the industry, which gives it a competitive edge over other companies in the event of a dip in gold prices.
In recent years, the company has been working on improving efficiency and expanding through mergers and acquisitions, particularly in 2019.
ABX shares trade on the TSX and can be purchased in Canadian dollars, although investors can also purchase shares of Barrick on the New York Stock Exchange using the ticker symbol GOLD.
The company operates globally and has historically offered investors an attractive dividend yield.
Although its sustainability score falls below the average of its peers, Barrick has been releasing annual sustainability reports since 2008.
Given its cost advantage and attractive valuation, Barrick Gold Corporation is a great option as a dividend-paying gold stock.
4. Kinross Gold Corporation
- Ticker: K.TO
- Size: Mid Cap
- Valuation: Value
- Forward Dividend Yield: 2.77%
- Dividend Payout Ratio: 48.00%
- Dividend Yield (12-Month Trailing): 1.71%
- Upcoming Dividend Date: Dec 14, 2023
- Market Cap: $8.24 Billion
- Forward P/E Ratio: 12.2
Kinross Gold is a well-established Canadian gold firm operating globally, with mines in Canada, the United States, Chile, Mauritania, and Brazil. With operations so broadly diversified worldwide, Kinross stock carries a higher geopolitical risk than most peers.
Aside from trading on the TSX under the ticker symbol K, Kinross is also listed on the New York Stock Exchange, where it can be bought with US dollars under the ticker symbol KGC.
The company offers a decent dividend yield, and its stock trades at lower valuations compared to its peers.
As a gold stock with an attractive valuation and good dividend yield, Kinross will appeal to gold investors that are also looking for an income stream.
5. Centerra Gold Inc
- Ticker: CG.TO
- Size: Small Cap
- Valuation: Value
- Forward Dividend Yield: 3.22%
- Dividend Payout Ratio: 5.66%
- Dividend Yield (12-Month Trailing): 3.06%
- Upcoming Dividend Date: Nov 29, 2023
- Market Cap: $1.33 Billion
- Forward P/E Ratio: 9.3
Centerra Gold is a Canadian gold mining company that operates two mines, one in Canada and the other in Turkey. The company aims to expand its operations in Canada and the US.
When compared to other gold companies, Centerra is smaller in size and trades at a much more inexpensive valuation.
Despite its smaller size, Centerra offers a good dividend yield and is an attractive option for value investors looking for a gold company with a good yield.
Aside from purchasing shares in Canadian dollars on the TSX, investors can also purchase Centerra on the New York Stock Exchange, under the ticker CGAU, in US dollars.
If you are a value investor and are looking for a dividend-paying gold stock, Centerra is a great one to consider.
6. Agnico Eagle Mines Limited
- Ticker: AEM.TO
- Size: Large Cap
- Valuation: Core
- Forward Dividend Yield: 2.85%
- Dividend Payout Ratio: 109.15%
- Dividend Yield (12-Month Trailing): 2.54%
- Upcoming Dividend Date: Dec 15, 2023
- Market Cap: $30.27 Billion
- Forward P/E Ratio: 19.19
Agnico is another massive Canadian gold mining firm with a presence in multiple countries, including Australia, Canada, Finland, and Mexico. It has ongoing development projects in Colombia and the US.
While Agnico prioritizes ESG metrics, its score is average compared to its industry peers. The company was established in 1957 and has consistently distributed a cash dividend since 1983. Its cost per gold ounce is in line with the industry average.
Like other Canadian gold companies, the company trades on the TSX (under ticker AEM) as well as on the New York Stock Exchange under the same ticker symbol. The company trades at a premium compared to its competitors and offers an excellent dividend yield to its shareholders.
Overall, it is a solid option for those seeking a well-established gold company with a substantial dividend.
Frequently Asked Questions
What are the Best Gold Stocks for Inflation?
All gold stocks are in theory a good option to consider during inflationary periods. This is because paper money is losing its value.
When looking at gold stocks to invest in to counter inflation, be sure to look closely at company-specific metrics. While all gold companies have some sort of exposure to fluctuating gold prices, some companies may be better managed than others.
Best Canadian Gold ETF?
If you are looking to diversify your gold investment, a gold ETF can be an excellent approach to this. Be sure to read my full guide on the best gold ETFs in Canada for more information.
Are Gold Stocks a Good Investment?
Whether or not a gold stock is a good investment will depend on your personal investment goals and objectives.
How well gold stocks perform is usually closely tied to movements in the price of gold. Gold companies tend to be more volatile than the underlying price of gold.
If your investment time horizon is long and you are able to stomach volatility, gold stocks may be a good option to consider as part of a well-diversified portfolio.
Gold stocks should almost never make up a large portion of your investment account. Typically, a single-digit or low double-digit allocation in the portfolio is enough.
How To Buy The Best Dividend-Paying Gold Stocks In Canada
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Conclusion
Although investing in gold directly does not usually offer investors the chance to enjoy an income stream, most gold company shares actually pay investors a decent yield through dividends.
Canadian gold stocks are found with very different characteristics. Some may be considered value stocks and be small in terms of market cap, while others can be massive growth names.
Keep in mind that a high dividend yield does not necessarily mean that an investment is better. Money that is paid out to investors through dividends is cash that is no longer available to the company to expand operations and grow.
If you are considering different ways of investing in gold, be sure to read my guide on how to buy gold in Canada.
