Tensions in the Middle East have been present since Israel became a nation-state in 1948. From the Arab-Israeli war in 1948 to the six-day war in 1967 and the Lebanon war in 1982, the probability for conflict in the region is always present.
This time may be different. The recent attack by Hamas on Israel could shape the future of the Middle East for decades to come. Just when things were looking like they had settled down in the Middle East, the heinous attack by Hamas stoked the bonfire again. This time, we could be in for a long struggle. (See how every country’s nuclear weapons arsenals rank.)
So, who would benefit if the Hamas-Israel war escalates? It is a solid bet that some of the top gold miners and royalty companies could shine. Gold is considered a safe-haven asset, and with the potential for an expansion of hostilities present, it makes sense to add some now.
We screened the BofA Securities gold-mining research universe looking for the top stocks. The following six are rated Buy, with some offering generous dividends. So, they look like great ideas for worried investors now.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Agnico Eagle Mines
This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold-mining company that has produced precious metals since 1957. It has declared a cash dividend every year since 1983.
Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden. The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. The stock backed up as gold has sold off March highs and with continued, albeit lower inflation you can bet many savvy portfolio managers are ready to add back top companies like this.
Shareholders receive a 3.32% dividend. The BofA Securities price target on Agnico Eagle Mines stock is $65. The consensus target is $66.93. Wednesday’s closing share price was $49.26.
This is another top company in the sector, and its stock still offers a very solid entry point. Barrick Gold Corp. (NYSE: GOLD) and Randgold Resources completed their merger on January 1, 2019. This created the world’s largest gold company in terms of production, reserves and market capitalization.
The company holds a 50% interest in the Veladero mine located in the San Juan Province of Argentina; 50% interest in the KCGM, a gold mine located in Australia; 95% interest in Porgera, a gold mine located in Papua New Guinea; 50% interest in the Zaldavar, a copper mine located in Chile; and 50% interest in the Jabal Sayid, a copper mine located in Saudi Arabia.
The company also owns gold mines and exploration properties in Africa and gold projects located in South and North America, and it has a strategic cooperation agreement with Shandong Gold Group.
Investors receive a 2.74% dividend yield. The $22 BofA Securities price target is in line with the $22.06 consensus target for Barrick Gold stock. On Wednesday, shares ended the session trading at $16.53 apiece.
This is a small-cap gold stock for investors who are more aggressive and looking for sector exposure. Gold producer B2Gold Corp. (NYSE: BTG) operates the Fekola Mine in Mali, the Masbate Mine in the Philippines and the Otjikoto Mine in Namibia.
It also has a 25% interest in Calibre Mining and a 19% interest in BeMetals. In addition, it has a portfolio of other evaluation and exploration assets in Mali, Uzbekistan and Finland.
B2Gold recently entered into an agreement with AngloGold Ashanti to acquire its 50% stake in the Gramalote Project in Colombia. Following the completion of the deal, the company will become the 100% owner of the project. That will boost its consolidated mineral resource base.
B2Gold stock comes with a 5.00% dividend. BofA Securities has a $4.80 price target, while the consensus target is $4.83. The shares closed on Wednesday at $3.36.
This off-the-radar play offers numerous ways for investors to make money. Franco-Nevada Corp. (NYSE: FNV) operates as a gold-focused royalty and streaming company in North America, Latin America and elsewhere. The company manages its portfolio with a focus on precious metals, such as gold, silver and platinum group metals. It also engages in the sale of crude oil, natural gas and natural gas liquids.
While the company is one of the leading gold-focused royalty and streaming companies with the largest and most diversified portfolio of cash-flow producing assets, its business model provides investors with gold price and exploration optionality while limiting exposure to cost inflation. Those are traits that some of the others do not offer.
The dividend yield is just 0.98%. BofA Securities has set its target price at $170. That compares with the $166.03 consensus target and Wednesday’s closing print of $139.90.
This is one of the largest mining companies and a solid buy for investors who are more conservative. Newmont Corp. (NYSE: NEM) is engaged in the production of gold.
Its North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in Nevada and Cripple Creek and Victor in Colorado. The South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Australia segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Africa segment consists primarily of Ahafo and Akyem in Ghana.
Newmont stock investors receive a 4.00% dividend. The BofA Securities price objective of $55 is less than the $75.95 consensus target, but the shares were last seen trading at $39.92.
Wheaton Precious Metals
This precious metals royalty stock makes good sense for more conservative investors looking for exposure to the sector. Wheaton Precious Metals Corp. (NYSE: WPM) is a Canadian precious metals streaming company with approximately 60% of its revenues from the sale of silver and 40% from gold.
Under the terms of long-term contracts, the company purchases silver and gold from a variety of mines, including Goldcorp’s Penasquito mine in Mexico, Vale’s Salobo mine in Brazil, the Lundin Mining Zinkgruvan mine in Sweden, and Glencore’s Antamina and Yauliyacu mines in Peru, and then sells the silver and gold into the open market.
Shareholders receive a 1.41% dividend. Wheaton Precious Metals stock has a $53 price target at BofA Securities. The consensus target is $57.23, and Wednesday’s close was at $42.98.
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The SPDR Gold Trust (NYSE: GLD) exchange-traded fund is perhaps one of the best pure plays on gold for investors. The trust that is the sponsor of the fund holds physical gold bullion as well as some cash. Each share represents one-tenth of an ounce of the price of gold. Note though that the fund does not pay a dividend.
Proper asset allocation should always include at least a single-digit percentage holding of precious metals like gold and silver. Not only do they hedge inflation, but they can really help if the market does go into correction or bear market mode, as they tend to trade inverse to markets.
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