Headquartered in Canada, Barrick Gold (GOLD) is among the world’s biggest gold and copper miners. I am bullish on the stock.
There’s an old saying among gold bugs: “If you can’t hold it, you don’t really own it.” It’s perfectly fine to own some physical precious metals, though you’ll need to store and protect it in a secure location. Furthermore, gold bullion doesn’t pay dividends.
In contrast, investors can participate in the gold price’s upside (if gold does, indeed, increase in value) through shares of premier mining companies. You’d be hard-pressed to find many resource companies with the size and renown of Barrick Gold. Plus, there’s an element of diversification here because Barrick has copper assets along with its gold-focused holdings.
Additionally, Barrick Gold pays dividends and, in fact, the company recently implemented an enhanced dividend policy. In the final analysis, you may find that Barrick stock’s value proposition is almost as good as gold itself – and just maybe, even better in some ways.
On TipRanks, GOLD scores a 9 out of 10 on the Smart Score spectrum. This indicates a high potential for the stock to outperform the broader market.
Golden Opportunity with a Yield King
Whereas gold bars and coins might cost you between $1,800 and $1,900 per ounce (plus any shipping and handling costs), GOLD stock is affordable at around $21 per share. Moreover, investors can easily buy and sell Barrick Gold shares in their self-directed trading accounts.
Granted, GOLD stock will sometimes follow the spot price of gold. That’s not necessarily a bad thing, though, especially if you believe that persistent dollar inflation will eventually have a positive impact on the gold price. Yet, it’s not wise to buy a mining stock just because you feel that gold and/or copper will become more expensive. You’ll also want to “drill down” and find out as much about the company as possible.
One great thing about Barrick in particular is the company’s firm commitment to rewarding its shareholders with consistent dividend payouts. Typically, it’s a good sign when a business is willing and able to pay generous dividends quarter-after-quarter, year-after-year.
To help cement the company’s status as a dividend king, Barrick Gold recently implemented a new dividend policy. This includes a base dividend as well as a performance-based enhancement to the dividend. In other words, the better Barrick performs, the more you could get paid as a shareholder.
As Barrick Gold Senior Executive Vice-president and CFO Graham Shuttleworth explained, “Our strong operating performance and robust net cash balance has allowed us to provide an enhanced dividend to our shareholders.” Thus, the company’s most recently announced 20-cents-per-share dividend payment included a base quarterly dividend of 10 cents and a performance dividend enhancement of 10 cents.
Since Barrick had a net cash balance of $743 million at the end of 2022’s first quarter, it shouldn’t be difficult for the company to continue distributing healthy dividend payments to its loyal shareholders.
A Time to Shine
Even with vast gold and copper assets and an attractive dividend policy, investors shouldn’t consider GOLD stock until they’ve researched Barrick’s financials. Fortunately, the company’s most recently reported quarter offers a treasure trove of positive data points.
The first metric to check is Barrick’s all-in sustaining costs (AISC) for gold and copper. To put it in simplistic terms, AISC refers to the company’s cost to get the minerals out of the ground – the lower, the better. In Barrick Gold’s case, the company’s Q1 2022 AISC for gold was $1,164 per ounce, and for copper it was $2.85 per pound. Compared to the spot prices of these minerals, Barrick’s costs are relatively low.
Next, we can turn to Barrick Gold’s top- and bottom-line results for 2022’s first quarter. Reportedly, the company delivered $2.85 million in revenue, slightly surpassing the analysts’ consensus estimate. Along with that, Barrick reported quarterly adjusted net earnings of 26 cents per share, beating the consensus estimate of 23 cents per share.
Looking ahead, Barrick Gold sounds quite confident in its ability to continue delivering outstanding results. “With a stronger performance
expected in the second half of the year, Barrick remains on track to meet its 2022 production guidance,” the company assured.
What does that guidance look like? Barrick’s 2022 forecast for attributable production specifies 4.2 million to 4.6 million ounces of gold, as well as 420 million to 470 million pounds of copper. Those are ambitious objectives, but if any miner can achieve them, it would be Barrick Gold.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, GOLD is a Strong Buy, based on nine Buy and three Hold ratings. The average Barrick Gold price target is $29.12, implying 38.47% upside potential.
The Takeaway
Getting exposure to the potential upside in gold and silver, while collecting enhanced dividend payouts along the way, is a dream come true for resource-sector investors. With GOLD stock, you can combat inflation with a commodities-market legend, and enhance your returns over time by reinvesting the dividend distributions.
So, don’t be deterred by the idea that only tangible assets are worth owning. Barrick’s enduring commitment to shareholder value means that you can be a gold bug and a copper champion, even without touching the metal itself.
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