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We recently published a list of Top 10 Gold Stocks with Dividends. In this article, we are going to take a look at where Franco-Nevada Corporation (NYSE:FNV) stands against other top gold stocks with dividends.
Gold’s performance as an asset in 2024 has been immaculate, despite increasing global constraints. The price for it crossed the $2,900 per ounce mark, driven by strong purchasing by the central bank, increased investor demand, and its role as a hedge against economic uncertainties. Gold’s value as a safe haven increased due to inflationary concerns and increasing geopolitical instabilities, gaining interest from retail and institutional investors.
Total gold demand, including over-the-counter (OTC) investments, has reached a record high of 4,974 metric tons in 2024, as per the World Gold Council. This increase was majorly driven by central banks, which contributed over 1,000 metric tons of gold to the demand for the third consecutive year. Particularly central banks in emerging markets, such as China and India, looked to increase their gold reserves to diversify away from the U.S. dollar. Gold provided an astonishing return of 43.83% for the previous year, significantly above the broader market’s 20.89% gain for the same period.
The investment market for gold has seen major changes, where gold exchange-traded funds (ETFs) reported no major outflows for the first time since 2020, which marks a reversal from previous years of heavy liquidations. Moreover, physical demand for gold has been strong, with purchasing for bar and coins remaining stable at 1,186 metric tons. Technology-driven gold usage has also seen a surge of 7%, driven by the expansion of artificial intelligence and semiconductor industries. These industries rely on gold components for high-performance electronics.
Despite the overall strong performance of the market, gold jewelry demand saw a decrease of 11% in 2024 due to high prices, making it less affordable for consumers. Nevertheless, total spending on gold jewelry in monetary terms increased by 9%, highlighting the overall impact of increasing gold prices. The contrasting situation with lower demand for gold jewelry and high demand for investment highlights the changing role of gold in the global economy.
Market experts and top financial institutions hold a positive outlook on gold’s trajectory for 2025. Goldman Sachs has recently revised its forecast for the gold price to $3,100 per ounce, citing the enhancing accumulation by the central bank and increasing investor interest. Likewise, analysts from J.P. Morgan have projected that gold prices could increase to $3,000 per ounce if macroeconomic instability continues.
Looking ahead, the gold market is being influenced by global monetary policies as well. As per J.P Morgan, major economies like the U.S. and Europe looking to cut down interest rates and lower return on traditional investments will likely drive up the demand for gold. Historically, the opportunity cost of holding gold reduces as traditional investments produce lower yields, increasing prices.
Conclusively, under these circumstances, investment in gold stocks has become a lucrative opportunity for investors looking to gain from the metal’s performance while generating hefty returns through dividends. Gold mining companies with strong financial performance, continual dividends, and major hedge fund backing provide a golden opportunity to enter the sector.
Methodology
To come up with our list of the Best Gold Dividend Stocks to Buy Now, we first recognized companies in the gold sector, offering dividend payments, along with posing strong market capitalizations. We then shortlisted stocks by looking into hedge fund interest, as stocks with strong hedge fund backing often point to stable financials and growth potential.
To rank these stocks, we used Insider Monkey’s Hedge Fund Database as of Q4 2024. The companies were sorted on the basis of the number of hedge funds invested in them, ranking companies with the highest hedge fund interest in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Franco-Nevada Corporation (FNV): Among Top Stocks With Dividends
An aerial view of a large gold mine showing the extensive activity of natural resource extraction.
Franco-Nevada Corporation (NYSE:FNV), a dominant player in gold-focused royalty and streaming, operates globally, including in South and North America. The company has a broad portfolio of precious metal assets, including silver, platinum group metals, and gold, also yielding profits from gas and oil.
Compared to the $309.5 million revenue generated in the prior year, Franco-Nevada reported $275.7 million in Q3 ended September 30, 2024. However, revenue increased by $33.5 million or 14% year-over-year after eliminating the effect of Cobre Panama, which remains in preservation and safe management. Adjusted net income reached $153.9 million, or $0.80 per share, whereas adjusted EBITDA stood at $236.2 million. Furthermore, the company maintains strong margins as its cash costs per gold equivalent ounce (GEO) remained low at $290 per GEO. Franco-Nevada Corporation (NYSE:FNV) was able to mitigate delays at new mining operations and offset lower-than-expected gold deliveries from Candelaria by taking advantage of record-high gold prices.
Furthermore, the company locked in a major $500 million precious metals streaming deal with Sibanye-Stillwater on December 19, 2024, allowing it to seal long-term gold and platinum deliveries from its mining operations in South Africa, mainly Kroondal, Marikana, and Rustenburg. This deal will result in immediate cash flow and a stable GEO production profile for the next two decades, with a mine life extending beyond 45 years. The company was able to bolster its commitment to strengthening its gold portfolio as the stream was comprised of approximately 70% gold and 30% platinum deliveries.
Moreover, Franco-Nevada Corporation (NYSE:FNV) declared an upsurge in its quarterly dividend to $0.38 per share, payable on March 27, 2025. This signifies the company’s 18th consecutive annual dividend hike and a 5.56% rise from the previous $0.36 per share. Long-term shareholders are earning an effective 13.7% yield on their initial cost base, which also includes those who invested during the company’s 2007 IPO.
Additionally, the shares of the company have climbed by 26.6% on a year-to-date basis, backed by increasing gold prices and a robust streaming portfolio. Thus, it is one of the best gold stocks to buy.
Overall, FNV ranks 6th on our list of other top gold stocks with dividends. While we acknowledge the potential of FNV, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FNV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
