This is another company with a solid balance sheet that makes sense for investors to consider. Goldcorp Inc. (NYSE: GG) engages in the acquisition, exploration, development and operation of precious metal properties in Canada, the United States, Mexico and Central and South America. The company primarily explores for gold, silver, copper, lead and zinc deposits. Its principal mining properties include the Red Lake, Éléonore, Porcupine and Musselwhite gold mines in Canada; the Peñasquito and Los Filos mines in Mexico; the Marlin property in Guatemala; the Cerro Negro and Alumbrera mines in Argentina; and the Pueblo Viejo mine in the Dominican Republic.
Wall Street analysts feel that the company deserves a premium valuation to its peers due to its excellent balance sheet, growth profile with lower-cost new mines, longer average mine life and a solid dividend yield. Over the past year, Goldcorp has been altering its mine plans, cutting spending and disposing of assets in order to reduce costs and focus on the most profitable production.
Goldcorp investors are paid a 1.56% dividend. The $18.50 Merrill Lynch price target is higher than the consensus, which is at $17.26. Shares closed Tuesday at $16.83.
This is one of the largest mining companies, as well as a solid buy for more conservative accounts. Newmont Mining Corp. (NYSE: NEM) is a leading gold and copper producer that employs approximately 29,000 employees and contractors, with the majority working at managed operations in the United States, Australia, Ghana, Peru, Indonesia and Suriname.
Newmont is the only gold producer listed in the S&P 500 index and was named the mining industry leader by the Dow Jones Sustainability World Index in 2015. The company is also an industry leader in value creation, supported by its leading technical, environmental, social and safety performance. Newmont was founded in 1921 and has been publicly traded since 1925.
The company posted mixed results recently, with earnings missing the consensus Wall Street forecast, but with revenues that actually came in above estimates. Merrill Lynch points out that the company has lowered debt almost 19% since the end of 2014, a huge positive for investors.
Newmont investors are paid a small 0.4% dividend. The Merrill Lynch price target is $27. The consensus target stands at $26.72. The stock closed Tuesday at $27.79.
Proper asset allocation should always include a single-digit percentage holding of precious metal like gold and silver. Not only do they hedge over the long term, they can really help if the market does go into correction or bear market mode, as they tend to trade inversely to markets trading down. They also provide a cushion when world events rattle investor nerves.