This Dividend Stock Has Doubled in 2025. Is It Still a Buy?

With a year-to-date gain of over 105%, Anglogold Ashanti (AU) has outperformed most of its gold mining peers, and its returns are nearly twice that of the VanEck Gold Miners ETF (GDX), which invests in a basket of gold mining companies. AU has an attractive dividend policy, which means that along with the capital gains, investors get rewarded by the dividend payouts. In this article, we’ll discuss whether Anglogold Ashanti remains a buy despite having more than doubled in 2025.

The Bull Case for Gold Prices

Being a commodity producer, AU’s fortunes are tied to the commodity that it produces, which is gold (GCY00) in this case. The precious metal has come off its highs as trade tensions have eased and President Donald Trump has seemed to take a more reconciliatory tone on tariffs. The geopolitical situation has also gotten better, even as the Middle East peace deal looks fragile.

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However, I believe gold is currently in a structural bull market as the geopolitical turmoil looks here to stay. Also, there could be some short-term bullishness as the Aug. 1 tariff deadline looms.

While a section of the market has been pivoting to Bitcoin (BTCUSD) amid the uncertainty, many investors remain hooked to gold. There is significant appetite for alternative assets among retail investors, and a recent survey by brokerage eToro conducted on 10,000 self-directed investors showed that 58% either recently invested in gold or crypto, or plan to do so in the near term.

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Central banks have emerged as key gold buyers and have collectively bought 1,000 metric tons annually for the last three years, which, for context, is twice what they bought every year on average in the preceding decade. Consultancy firm Metals Focus predicts that while the central bank gold buying would dip year-over-year in 2025, the number would be ahead of 1,000 metric tons for the fourth consecutive year.

In its annual report last month, Metals Focus said that the trend toward de-dollarization remains in place. It added, “If anything, President Trump’s unpredictable policy stance, his public criticism of [Federal Reserve Chair] Jerome Powell and the deteriorating U.S. fiscal outlook have further eroded confidence in the U.S. dollar and Treasuries as ultimate safe-haven assets.”

Anglogold Ashanti Looks Like a Good Buy

Gold remains a preferred hedge for many retail investors as well as central banks, and its appeal has only increased after the last few years of stellar gains. Within the gold mining space, Anglogold Ashanti is one name that investors can consider despite its breathtaking rally this year.

Firstly, the company has managed to lower its unit production costs, and its all-in sustaining costs (AISC) were $1,640 per troy ounce at the group level in Q1 2025, which is quite healthy. The company expects its group AISC to be between $1,580-$1,705 per troy ounce in 2025 and 2026.

Anglogold Ashanti trades at a forward enterprise value-to-earnings before interest, tax, depreciation, and amortization (EV-to-EBITDA) of 4.84x, which looks quite attractive and is below many of its peers. AU has deleveraged its balance sheet, and the company’s adjusted net debt-to-EBITDA was a mere 0.15x at the end of March.

It has been optimizing its portfolio and sold stakes in some of its tier 2 assets, which by definition have higher per-unit costs. In Q1, around two-thirds of Anglogold Ashanti’s production was from tier 1 assets, and the company expects the share to rise further as Obuasi ramps up operations and its Cuiaba mine moves to tier 1. While AU has historically traded at a discount to peers like Newmont Mining (NEM) and Agnico Eagle Mines (AEM), deleveraging and portfolio optimization should help narrow that gap.

AU Has a Variable Dividend Policy

Anglogold Ashanti currently pays a quarterly dividend of $0.125 per share. In addition, at the end of the year, it intends to top up the dividend to pay 50% of its free cash flow to investors. If gold prices continue at these levels, Anglogold investors can expect a juicy payout.

The company generated $403 million of free cash flow in Q1, and analysts expect the metric to come in at $2 billion in 2025 and $2.4 billion in 2026. While these are still estimates and not official guidance, AU should be able to generate stellar cash flows in the medium term, given the positive outlook for gold prices. At the company’s current market cap of $20.1 billion, a $1 billion payout (assuming a 50% payout on $2 billion free cash flows) implies a forward dividend yield near 5%, which is quite healthy.

Overall, for someone looking to buy a gold stock with a high dividend yield, Anglogold Ashanti looks like a good fit. As gold prices continue to trade at elevated levels, AU can deliver decent capital gains along with a fat dividend payout to investors over the next couple of years.

On the date of publication, Mohit Oberoi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com