Should You Buy Kinross Gold or Barrick Gold Stock Now?

Investors are searching for the best gold stocks to buy for their portfolios.

| More on:
gold stocks gold mining

Image source: Getty Images

Gold is moving higher, as global investors look for a safe-haven strategy to park cash and protect against inflation. Mining stocks are catching a tailwind as a result, and investors who missed the surge over the past two months are wondering which top gold stocks might be good to buy today.

Kinross Gold

Kinross Gold (TSX:K)(NYSE:KGC) is up in 2022 but still down about 40% from the 2020 high. Gold, however, is only about 5% below its 2020 peak. Given the outlook for the company’s production in the next few years, Kinross Gold stock appears undervalued.

Kinross Gold produced 2.1 million gold equivalent ounces in 2021. Management is targeting output of 2.65 million ounces in 2022, 2.8 million in 2023, and 2.6 million in 2024.

The 2021 average realized gold price was US$1,797 per ounce last year. Gold currently trades near US$1,980 per ounce and has been above US$1,800 for most of 2022. All-in sustaining costs (AISC) came in at US$1,138 per ounce last year. Kinross Gold expects AISC to be about the same in 2022.

The company should generate rising free cash flow in the next three years to support dividend growth and ongoing share buybacks. The current quarterly payout of US$0.03 per share provides a 2% yield at the time of writing.

Barrick Gold

Barrick Gold (TSX:ABX)(NYSE:GOLD) also looks cheap right now. The shares trade near $32.50 at the time of writing compared to near $40 at the high in 2020.

Barrick Gold raised its quarterly base dividend by 11% to US$0.10 per share for 2022. That provides a current annualized yield of about 1.5%. Barrick Gold also gave shareholders a special return of capital in 2021 that was US$0.42 per share. The new dividend policy will see Barrick Gold pay the base dividend plus extra funds determined by the size of the net cash position. If net cash is above US$1 billion at the end of the quarter, investors will get an extra US$0.15 per share. With gold trading well above US$1,900 per ounce, investors could see meaningful extra dividends through the end of this year.

Barrick Gold owns six of the top 10 mines in the world. The company continues to invest in exploration and is making strategic acquisitions to boost long-term growth opportunities. Barrick Gold effectively replaced its production with new resources in 2021 and has several promising new sites around the world.

Gold outlook

The recent tailwind behind the price of gold could extend the rally to new highs in 2022 or 2023. Geopolitical uncertainty due to the war in Ukraine is driving demand for safe-haven assets, such as gold. At the same time, gold is viewed as a good asset to hold to protect buying power. Inflation in the United States came in at 8.5% for March.

At the same time, investors who shifted cash from gold to Bitcoin in the past couple of years might be moving back into the yellow metal due to the volatility in the crypto market. Potential crackdowns by governments on cryptocurrencies could extend the reversal.

Is Kinross Gold or Barrick Gold a buy?

Kinross and Barrick Gold both look cheap right now. Kinross will likely deliver better production growth over the next two years, but Barrick appears to be ahead of Kinross on its turnaround efforts and could provide investors with better total dividend payouts. If you think the price of gold is headed higher, I would probably split a new investment between the two stocks today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker has no position in any stock mentioned. The Motley Fool owns and recommends Bitcoin.

More on Metals and Mining Stocks

Gold bars
Metals and Mining Stocks

Barrick Gold’s 2023 Earnings Surge 200%: Is It a Buy?

Barrick Gold’s stock price continues to trade low despite a 200% surge in its earnings. What should you do?

Read more »

gold stocks gold mining
Stocks for Beginners

Agnico Eagle Mines Stock Soars Higher on 10.5% Increase in Gold Reserves

AEM stock (TSX:AEM) posted strong earnings, bringing the share price back up after falling 15% so far in 2024. And…

Read more »

bulb idea thinking
Stocks for Beginners

Cameco Stock Could Pop After Earnings: Is It a Buy Beforehand?

Cameco stock (TSX:CCO) has seen shares increase substantially in the last year, but is it all due to higher spot…

Read more »

value for money
Metals and Mining Stocks

1 Growth Stock Down 57% to Buy Right Now

Growth stock FM (TSX:FM) is a strong option for those wanting in after a major fall during the last year,…

Read more »

gold stocks gold mining
Metals and Mining Stocks

Want to Invest in Gold? Here’s the Best Way to Do it in 2024

Agnico Eagle Mines (TSX:AEM) and another gold stock are worth adding to your watchlist this winter.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Friday, February 2

Labour market data from the United States and corporate results will remain on TSX investors’ radar today.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Thursday, February 1

Weak metals prices could drive TSX mining stocks lower at the open today, as investors continue to digest the Fed’s…

Read more »

A miner down a mine shaft
Metals and Mining Stocks

2 Top TSX Mining and Materials Stocks to Buy for February 2024

Here are two of the best dividend-paying TSX mining and materials stocks you can buy in February 2024.

Read more »