This article is an excerpt from Barronâ€™s 10 favorite stocks for 2021. To see the full list, click here.Â
Gold remains a good hedge against ultraloose monetary policies worldwide and possible higher inflation. The metal has risen 24% this year to $1,880 an ounce, but it is way behind Bitcoin, a digital alternative, which is up 220% to more than $23,000.
One of the better ways to play gold is through mining industry leader Newmont (ticker: NEM). At $60, its stock isnâ€™t expensive, fetching 14 times estimated 2021 earnings of $4.15 a share and yielding 2.7%, against 1.6% for the S&P 500. Its shares have pulled back lately, along with gold, which peaked at over $2,000 an ounce in August. The shares would gain over 20% if they merely got back to their August high of $72.
Newmont / NEM
Newmont boosted its payout by 60% in October under a policy tying the dividend to gold prices. The company sees annual free cash flow of more than $3 billion annually at current prices, for a 6% free-cash-flow yield.
â€œOur portfolio is hitting its stride,â€ Newmont CEO Tom Palmer told Barronâ€™s in October. Investors worry about mines being wasting assets, but Newmont expects to maintain annual gold production of six million ounces or better for a decadeâ€”and beyond.
Joe Foster, portfolio manager of the VanEck International Investors Gold fund (INIVX), sees gold and gold stocks as alternatives to low-yielding bonds. Among alternative assets, none have goldâ€™s â€œestablished history of a store of wealth,â€ he recently wrote.
Write to Andrew Bary at email@example.com