Add Some Bling to Your TFSA With This Gold Mining Stock

Agnico Eagle Mines (TSX:AEM) stock looks too cheap to ignore as gold looks to make its next move.

| More on:
gold stocks gold mining

Image source: Getty Images

New TFSA (Tax-Free Savings Account) investors who are looking to further diversify (or even hedge) their portfolios may have looked at the gold. Indeed, gold is a pretty divisive alternative investment. Many gold bugs (or huge bulls on the shiny yellow metal) can’t seem to get enough of the age-old store of wealth.

Gold could shine from current levels

Meanwhile, some other investors, most notably, Warren Buffett, aren’t the biggest fans of the metal as an investment. Indeed, it’s a non-productive asset that doesn’t pay a dividend. In fact, you’ve got to pay to have it stored, which, in a way, can act as the opposite of a dividend, but not really!

In any case, I view gold as an intriguing portfolio stabilizer and secure store of wealth for investors who are eager to seek a place to stash excess cash as rates remain on the lofty side. Compared to the likes of a cryptocurrency, I’d argue that gold is a better choice, given it’s been viewed as valuable for many centuries.

Though cryptocurrencies may be the more enticing way to play the game of greater fools (based on the Greater Fool Theory, which has nothing to do with us here at The Motley Fool!), I’d argue that gold is a more “sleep-easy” way to stabilize your portfolio from the stormy times that always tend to hit after periods of robust bullish moves. Given the choppiness in the crypto markets, I’d imagine it’s pretty hard to get a good night’s rest if you’ve got a lot of skin in the game.

In this piece, we’ll check out an intriguing gold miner that could add some value (or bling) to your TFSA portfolio. Though gold prices (and pretty much any other commodity) are impossible to predict over the near to medium term, I think there is value to be had in top-tier miners while they’re going for somewhat reasonable prices of admission.

Gold shines. Its miners? Not so much!

You see, despite gold’s remarkable past-year run, the gold miners themselves haven’t been all too sizzling. Indeed, it can be a bit odd to see the price of gold hover just shy of all-time highs while the miner stocks are more than 40% away from their own peak levels.

In any case, I find that the longer gold stays elevated, the greater the gravitational pull will be for the best-in-breed miners, like Agnico Eagle Mines (TSX:AEM), a miner whose shares yield 3.3% at the time of writing.

Apart from the terrific dividend (the main star of the show, in my humble opinion), the firm has been operating quite well (and a tad more efficiently) of late. Recently, the firm reiterated its production guidance for 2024. That’s a jolt of confidence for prospective buyers.

In any case, the firm seems to be one of the best low-cost gold mining firms to play the rising price of gold. At writing, shares go for 12.2 times trailing price to earnings. Though cheap, the main star of the show remains that dividend, which looks safe and steady, with a bit of room for growth should gold prices take an unexpected leg higher through the year.

The bottom line

Though I’m not a big fan of overweighting one’s TFSA portfolio in gold, I view Agnico as a terrific miner who stands to pay a wonderful dividend. Whenever you can get paid a nice dividend for a portfolio-diversifying asset, the value proposition looks that much more intriguing.

The business of gold mining can be quite turbulent, but AEM stock, I believe, is a great way to ready your TFSA for any sort of rocky market climate.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Metals and Mining Stocks

todder holds a gold bar
Stocks for Beginners

Is the Worst Over for SSR Mining Stock?

SRR Mining stock has been rising higher after recent earnings performance that made a bit of a comeback. So is…

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Metals and Mining Stocks

The Only Canadian Mining Stock Investors Need Now

Mining stocks can be risky. That is, unless you invest in a mining stock like this one, that offers safety,…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

1 Canadian Mining Stock Worth a Long-Term Investment

When it comes to mining companies, silver stocks offer a massive opportunity.

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Energy Stocks

Gold Stocks vs Oil Stocks: Where Canadians Should Invest for the Rest of 2024

Gold's momentum looks strong for the rest of 2024, especially with economic uncertainties. But don't write off oil stocks yet…

Read more »

Value for money
Metals and Mining Stocks

2 Passive-Income Stocks Offering Value on Value

These two miners are the perfect options for those seeking value and dividends for life. Pick up these passive-income stocks…

Read more »

TFSA and coins
Dividend Stocks

Beyond Basic: Turn That TFSA Into a Gold Mine With $7,000

Basic materials are anything but basic. These are the back bone of every economy, and should be the back bone…

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Stocks for Beginners

10% Dividend Yield! I’m Buying This TSX Stock and Holding it for Decades

Sometimes it takes thinking outside the box to really get in on some strong action. And that's what we're considering…

Read more »

Piggy bank and Canadian coins
Stocks for Beginners

Time to Pounce: 1 TSX Stock That Hasn’t Been This Cheap in Way Too Long

This silver stock offers up a huge opportunity for growth, all while trading at a price that is far too…

Read more »