Up 59% YTD, Is This Gold Dividend Stock Still a Buy?

The last few weeks have witnessed global markets on their wildest rollercoaster ride since the pandemic, with turbulence shaking financial landscapes. Amid mounting U.S. recession fears and a massive unwind of short positions, the Cboe Volatility Index ($VIX), also known as the market’s “fear gauge,” spiked to levels last seen during the COVID-19 pandemic, underscoring the intense turmoil gripping investors.

Gold is gaining from its reputation as a safe haven, providing stability and potential gains when market volatility peaks. In fact, the precious metal has thrived this year, most recently lifted by increasing expectations of rate cuts. Today, the popular currency hedge is once again revisiting recent highs above $2,500 an ounce.

In 2024, gold futures (GCZ24) have climbed 15.7%, while cash gold (GCY00) has rallied 19.2%, both overshadowing the broader S&P 500 Index’s ($SPX) gains on a YTD basis. As gold draws investors' attention amid market chaos, leading gold miner AngloGold Ashanti plc (AU) has benefited as well, with shares soaring more than 59% this year. 

After the company’s recently unveiled Q2 earnings report, AU stock hit a fresh 52-week high of $30.19 on Aug. 9. Is now an opportune time to grab this dividend-paying gold stock? Let’s take a closer look to find out. 

About AngloGold Ashanti Stock

Founded in 1944, Johannesburg-based AngloGold Ashanti plc (AU) is a global gold mining powerhouse, boasting a robust portfolio that spans nine countries and four continents. With a focus on high-quality operations and exploration, the company’s strategy extends beyond gold to include value-rich opportunities in other minerals. The company’s market cap presently stands at $12.5 billion. 

Shares of this gold mining company have skyrocketed nearly 67% over the past 52 weeks, eclipsing the broader SPX’s 20% gain during the same time frame. In 2024 alone, the stock has staged an impressive performance, up 59%, whereas the SPX has climbed only 12% on a YTD basis.  

Zooming in further, AU stock has also outperformed the iShares Global Gold Miners ETF’s (RING) 33.6% gain over the last 52 weeks and 24.1% return on a YTD basis. 

Despite the strong price action, AU stock remains a bargain. Priced at 12.98 times forward earnings, the stock is trading lower than its industry peers. Moreover, the stock is priced at 2.72 times sales, which is well below its own five-year average of 14.85x. 

AngloGold Rallies After Solid Q2 Earnings 

Shares of AngloGold surged 4.7% on Aug. 6 after the company revealed its impressive fiscal 2024 Q2 and first-half earnings results. The company’s revenue for the quarter climbed 19.3% year over year to $1.4 billion. Plus, its EPS of $0.60 crushed estimates by a solid 17.7% margin, and reflected a remarkable turnaround from the loss per share of $0.20 recorded in the year-ago quarter. 

In Q2, gold production soared 12.2% sequentially to 663,000 ounces, up from 591,000 ounces in Q1. This boost was driven by a rebound in Australian assets following first-quarter flooding. Fueled by this robust Q2 performance, gold production in the first half hit approximately 1.3 million ounces, up from 1.2 million ounces in the same period last year.

During the first half, the company generated $206 million in free cash flow, compared to a negative free cash flow of $205 million in the same period last year. As of June 30, the company maintains strong liquidity, totaling approximately $2.3 billion, which includes $983 million in cash and cash equivalents.

For fiscal 2024, management forecasts total gold production to range between 2.65 million ounces and 2.85 million ounces, while capital expenditure is anticipated to be between $1.1 billion and $1.4 billion. Looking forward to fiscal 2025, the company projects total gold production to land between 2.71 million ounces and 2.91 million ounces. In addition, capital expenditures are expected to range between $1.2 billion and $1.4 billion. 

Analysts tracking AngloGold project the company to swing to a profit of $2.29 per share in fiscal 2024, with further bottom-line improvement of almost 28% to $2.93 per share in fiscal 2025.

AngloGold’s Staggering Interim Dividend Boost

Riding high on a stellar Q2 and first-half performance marked by strong production, lower cash costs, and impressive free cash flow, the gold miner announced a fat interim dividend of $0.22 per share on Aug. 6. 

Set to be distributed to shareholders on Sept.13, this dividend represents a dramatic 450% increase from last year’s $0.04 per share, highlighting the company's solid balance sheet and positive outlook for the rest of the year.

AngloGold’s forward annualized dividend of $0.44 per share translates to a solid 1.48% dividend yield. Plus, with a healthy payout ratio of 36.68%, the company effectively balances generous shareholder returns with the financial flexibility needed to fuel future growth.

What Do Analysts Expect for AngloGold Ashanti Stock?

Wall Street appears optimistic about AngloGold’s prospects. AU stock has a consensus “Moderate Buy” rating overall. Out of the four analysts offering recommendations for the stock, two recommend a “Strong Buy,” and the remaining two have a “Hold” rating.

While the stock currently trades roughly flat with its average analyst price target of $29.50, the Street-high target of $34, newly raised by BMO Capital on Aug. 7, suggests a potential upside of nearly 13.6% from current price levels.