There has been no ambiguity from Federal Reserve Chair Jerome Powell, as he and the rest of Washington, D.C., over the past 16 months have had to face the music over spiraling inflation and the rampant government spending spree that took inflation to the highest levels in over 40 years. While the searing inflation has fallen from 9.1% to 3.0% on a year-over-year basis, that decline comes after a 5% increase in the federal funds rate over the past year, and there is a good chance we see another 25-basis-point hike at the end of July.
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The question for investors is what to do now, especially after a massive market rally this year that has seen the Nasdaq jump 38% and the S&P 500 up almost 20%. One of the best ideas has always been to seek positions in commodities, and the best area for investors to look at are the top gold miners and royalty companies. While gold has exploded higher this week as the worries of an economic and U.S. dollar meltdown continue to build, it still offers investors another chance to grab the glittering bullion.

We screened the BofA Securities gold-mining research universe looking for the top stocks and found six companies that are rated Buy, with some paying quite respectable dividends, and look like great ideas for worried investors now, or those looking to hedge big market gains. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Agnico Eagle Mines

This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold-mining company that has produced precious metals since 1957. It has declared a cash dividend every year since 1983.

Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden. The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. The stock backed up as gold has sold off March highs and with continued, albeit lower inflation you can bet many savvy portfolio managers are ready to add back top companies like this.

Shareholders receive a 3.04% dividend. The BofA Securities price target on Agnico Eagle Mines stock is $65. The consensus target is $67.49, and shares traded early Thursday at $53.10.

Barrick Gold

This is another top company in the sector, and its stock still offers a very solid entry point. Barrick Gold Corp. (NYSE: GOLD) and Randgold Resources completed their merger on January 1, 2019. This created the world’s largest gold company in terms of production, reserves and market capitalization.
The company holds a 50% interest in the Veladero mine located in the San Juan Province of Argentina; 50% interest in the KCGM, a gold mine located in Australia; 95% interest in Porgera, a gold mine located in Papua New Guinea; 50% interest in the Zalda­var, a copper mine located in Chile; and 50% interest in the Jabal Sayid, a copper mine located in Saudi Arabia.
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Barrick also owns gold mines and exploration properties in Africa and gold projects located in South and North America. It also has a strategic cooperation agreement with Shandong Gold Group.

Investors receive a 2.31% dividend. BofA Securities has a $23 price target, while Barrick Gold stock has a consensus target of $23.16. Thursday morning, shares traded at $17.50.

B2Gold

This is a small-cap gold stock for investors who are more aggressive and looking for sector exposure. B2Gold Corp. (NYSE: BTG) is a global, growth-oriented mid-tier gold producer whose primary assets include gold mines located in Nicaragua (La Libertad and El Limon), the Philippines (Masbate), Namibia (Otjikoto) and Mali (Fekola).

During the third quarter, the company recorded consolidated gold production of 295,723 ounces, up 19% year over year on solid performance across three of its operating mines. B2Gold increased throughput at the Fekola mill and completed the significant waste stripping campaigns at both Fekola and Otjikoto mines. The Fekola and Otjikoto mines achieved record quarterly gold production in the third quarter of 2021.

B2Gold stock comes with a 4.40% dividend. The $4.80 BofA Securities price target is less than the consensus target of $4.94, but shares traded early Thursday at $3.75.

Franco-Nevada

This off-the-radar play offers numerous ways for investors to make money. Franco-Nevada Corp. (NYSE: FNV) operates as a gold-focused royalty and streaming company in North America, Latin America and elsewhere. The company manages its portfolio with a focus on precious metals, such as gold, silver and platinum group metals, and it also engages in the sale of crude oil, natural gas and natural gas liquids.

While the company is one of the leading gold-focused royalty and streaming companies with the largest and most diversified portfolio of cash-flow producing assets, its business model provides investors with gold price and exploration optionality while limiting exposure to cost inflation. Those are traits that some of the others do not offer.

The dividend yield here is just 0.93%. BofA Securities has set its target price at $170, well above the consensus target of $158.27. Franco-Nevada stock traded at $148.25 on Thursday.

This is one of the largest mining companies and a solid buy for investors who are more conservative. Newmont Corp. (NYSE: NEM) is engaged in the production of gold.
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Its North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in Nevada and Cripple Creek and Victor in Colorado. The South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Australia segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Africa segment consists primarily of Ahafo and Akyem in Ghana.

Newmont stock investors receive a 3.56% dividend. The BofA Securities price objective of $55 is much lower than the $78.23 consensus target. Shares traded at $45.25 on Thursday.

Wheaton Precious Metals

This precious metals royalty stock makes good sense for more conservative investors looking for exposure to the sector. Wheaton Precious Metals Corp. (NYSE: WPM) is a Canadian precious metals streaming company with approximately 60% of its revenues from the sale of silver and 40% from gold.

Under the terms of long-term contracts, the company purchases silver and gold from a variety of mines, including Goldcorp’s Penasquito mine in Mexico, Vale’s Salobo mine in Brazil, the Lundin Mining Zinkgruvan mine in Sweden, and Glencore’s Antamina and Yauliyacu mines in Peru, and then sells the silver and gold into the open market.

Shareholders receive a 1.34% dividend. Wheaton Precious Metals stock has a $53 price target at BofA Securities. The consensus target is up at $57.60, but shares traded hands on Thursday at $44.50.

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The SPDR Gold Trust (NYSE: GLD) exchange-traded fund is perhaps one of the best pure plays on gold for investors. The trust that sponsors the fund holds physical gold bullion, as well as some cash. Each share represents one-tenth of an ounce of the price of gold. Note though that the fund does not pay a dividend.

Proper asset allocation should always include at least a single-digit percentage holding of precious metals like gold and silver. Not only do they hedge inflation, which is still huge and could be over the long term, but they can really help if the market does go into correction or bear market mode, as they tend to trade inverse to markets.

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