Meet the 5.3% Yielding Dividend Stock That Could Soar in 2026

Uncover the opportunities with Lundin Gold as a dividend stock poised for significant growth in the coming years.

Key Points
  • Lundin Gold Positioned for a Potential Upsurge: Lundin Gold stands poised for significant growth, driven by strategic factors such as potential increases in gold prices due to global geopolitical instability and fiscal maneuvers by the US government, which can revalue its vast gold reserves to address its fiscal deficit.
  • Attractive Dividend and Upside Potential: With a robust 5.25% yield and a dividend policy that capitalizes on surplus free cash flow, Lundin Gold offers not only substantial income but also the potential for stock price appreciation, particularly given its low AISC and strong market positioning as demand for gold bolsters. Investing now, as it is 28% below its February peak, could yield significant gains if gold prices rise.

This year, energy stocks gained in the first half as the Iran war created an energy shockwave like that of the February 2022 Russia-Ukraine war. Taking a leaf from the past, gold mining stocks surged from July 2022 to March 2023 even when the US Fed increased interest rates. The history could repeat itself, and this 5.3% yielding dividend stock could surge 80–100% in the second half of 2026 and the first half of 2027.

The stock is Lundin Gold (TSX: LUG), a Canadian gold mining company that has the lowest all-in sustaining cost (AISC).

gold prices rise and fall

Source: Getty Images

Why could the dividend stock soar in 2026?

What makes me confident about Lundin Gold stock is the nature of gold and how it reacts to interest rates and the dollar’s strength. Generally, the gold price rises when the interest rate falls. But after the Russia-Ukraine war spiked oil prices to US$125/barrel and the United States froze Russia’s US$300 billion worth of assets, gold demand surged. Central banks worldwide started buying gold to diversify their reserves and reduce concentration risk. Since then, central banks have been on a gold-buying spree. The reduced confidence in the dollar sent gold prices up between July 2022 and March 2023, even when interest rates fell.

The gold price has dipped once again as all the reserves are going into the Iran war and securing safe passage for oil. Once the situation settles, either through alternate supply sources or a reduction in oil demand, global central banks could once again resume gold buying.

Could gold resolve the US fiscal deficit?

The rising gold prices could work in the favour of the United States, which owns the world’s largest gold reserves. The country’s massive US$30 trillion plus fiscal deficit and US$1 trillion in annual interest have been a major cause of concern. However, the US government has its gold reserves valued at a 1973 rate of $42.22 per troy ounce.

There is active discussion on revaluing the reserve at the current market rate of approximately $5,000 per ounce. The Federal Reserve has also published a research report titled “Official Reserve Revaluations: The International Experience,” published on August 1, 2025. A valuation change could create an unrealized gain and significantly reduce the US fiscal deficit.

Why buy this 5.3% yielding dividend stock now?

Fear boosts the gold price and pulls down the stock market. Stocks like Lundin Gold stand at the intersection of the two. Their gold inventory gives you exposure to gold price momentum as their share price rises alongside the gold price. Being in the mining business, they can sell their inventory at a higher market price even when the cost remains low.  

The surplus cash flow from selling gold at a higher price is redistributed to investors in the form of a special dividend. Lundin Gold’s dividend policy states that 50% of the surplus free cash flow left after allocating US$300 million for fixed dividends will be paid as a variable dividend. The fixed quarterly dividend per share is $0.30, and the company declared a dividend of $1.15 per share in the first quarter of 2026. This was possible because its average realized gold price of US$4,951/oz sold was way higher than its AISC of $1,114/oz sold.

Now is a good time to buy the stock, as the variable dividend component could earn you more than just a 5.3% yield. Moreover, the increase in gold price could drive the stock price up. Right now, Lundin Gold’s stock has fallen 28% from its February 2026 peak of $130.98. Recovering to its previous peak could drive the stock price up 39%. Any new gold price rally could push the share price to a new high. An 80–100% rally seems realistic.

Fool contributor Puja Tayal 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 Dividend Stocks

customer fills up car with gasoline
Dividend Stocks

How Much Emergency Money Do Canadians Actually Need?

A safety fund equivalent to 3 to 6 months of living expenses is generally the baseline buffer that Canadians would…

Read more »

woman holding steering wheel is nervous about the future
Dividend Stocks

Still Up Double Digits This Year: Should You Still Invest in TSX Stocks After Thursday’s Dramatic Drop?

The TSX has gained about 136% over the past decade. So, stay invested, dollar‑cost average, and maintain diversification. 

Read more »

Real estate investment concept
Dividend Stocks

Intact Stock: Would I Buy It for Growth, Income, or Both?

Intact’s modest yield makes profitable long-term growth the main attraction, with catastrophe losses putting the next purchase to a test.

Read more »

hiker with backpack in the mountains
Dividend Stocks

2 Top Canadian Dividend Stocks for $1,850 in Annual Passive Income

With reliable cash flows, high dividend yields, and strong growth prospects, these two Canadian stocks suit income-seeking investors.

Read more »

Data center woman holding laptop
Dividend Stocks

3 Canadian Data Centre Stocks to Buy Now, Ranked

Three Canadian stocks offer strategic exposure to the AI buildout and in-demand data centres.

Read more »

people sit in two wooden beach chairs facing the Caribbean ocean holding drinks and making a toast
Dividend Stocks

Is Manulife Worth Buying for Its Dividend for Retirement Income?

Manulife Financial (TSX:MFC) stock looks like a bargain buy for retirees seeking strong, growing dividends.

Read more »

diversification and asset allocation are crucial investing concepts
Dividend Stocks

How I’d Use $500 a Month to Build a Dividend Portfolio Before Retirement

A $500 monthly habit can build retirement income through contributions, reinvestment, and businesses that keep cash after their payouts.

Read more »

Colored pins on calendar showing a month
Dividend Stocks

CT REIT vs. SmartCentres: Which Monthly Payer Fits a TFSA Better?

CT REIT offers a larger payout cushion, while SmartCentres produces more monthly cash from the same investment.

Read more »