Gold prices (GCV25) have been on fire this year, which has led to sharp gains in gold mining companies. Specifically, AngloGold Ashanti (AU) stock has outperformed most of its peers and has more than tripled this year. It also has one of the most generous dividend policies in the gold mining space, and investors are in for a payout bonanza as higher gold prices lift the company’s cash flows and, by extension, dividends. Let's discuss whether AU is still a buy or if it's too late to buy this outperforming stock now.
Gold Prices Rally to Record Highs
To begin with, let’s decode the ongoing rally in gold prices. There are structural drivers like the central bank buying spree that are supporting gold prices. Moreover, gold’s stellar rally has pulled in interest from both retail and institutional investors, especially those who find cryptocurrencies out of their league. President Donald Trump’s trade policy has also been a tailwind for the precious metal, and it has emerged as among the foremost “Trump trades.”
Of late, a dovish Fed, which cut rates by 25 basis points in September—its first this year—has boosted investors' appetite for gold. Lower interest rates are theoretically positive for gold, which is a non-interest-bearing asset and therefore loses out to interest-bearing assets in periods of high interest rates. Government shutdown fears have also fueled the rally in gold, which is the ultimate safe-haven asset.
Overall, the macro environment for gold has been quite supportive, which is reflected in its price action.
I have been bullish on gold—and by extension gold mining companies, which are a leveraged play on gold—for quite some time now. The bullishness has paid off well, as both gold and gold mining companies have performed incredibly well this year. Specifically, AU stock has kept on building on its YTD gains, as it was up just about 140% when I last covered the company in August.
AngloGold Ashanti Investors Can Expect a Dividend Bonanza
AU has a well-defined dividend policy and currently pays a quarterly payout of $0.125 per share. Additionally, it is committed to topping up the dividend to pay 50% of its free cash flow to investors at the end of every year.
However, it made a slight departure from this policy and announced an interim dividend of $0.80 during its Q2 earnings call last month, which included the base dividend of $0.125 and the true-up payment to reach 50% of free cash flows in the first half.
Looking at the current trajectory of gold prices, AngloGold Ashanti investors should get an even fatter dividend in the second half of the year as the company ups the dividend to meet its payout target.
Why AU Stock Has Outperformed?
Notably, along with gold prices, AngloGold Ashanti was also a re-rating story. AU stock was trading at a significant discount to many of its peers amid concerns over its balance sheet and the quality of its portfolio.
Both these stories have played out well. While the rally in gold prices has driven gold miners higher, AU has used the bumper cash flows to strengthen its balance sheet and was nearly breakeven on the net debt basis at the end of Q2 2025. When we next hear from the company, it should have more cash on its balance sheet than the debt it owes.
AU has optimized its portfolio by selling stakes in some of its Tier 2 assets, which, by definition, have higher per-unit costs. At the same time, it has added Tier 1 assets, which have improved the overall quality of its portfolio and reserves. In Q2, around two-thirds of AngloGold Ashanti’s production and 80% of reserves were from tier 1 assets, and the company expects the share to rise further as Obuasi ramps up operations.
Is AngloGold Ashanti Stock Still a Buy?
While I remain a structural bull on gold given the global, in particular, U.S. fiscal position, I believe the yellow metal’s rally might take a breather in the short term, which would have implications for gold miners, which have had an almost unidirectional up move this year.
AngloGold Ashanti trades at a forward enterprise value-to-earnings before interest, tax, depreciation, and amortization (EV-to-EBITDA) multiple of 6.61x, which is towards the upper end of what it has averaged over the last three years. Moreover, the valuation gap between AU and its peers has narrowed after its outperformance, and the rerating story has somewhat played out. While the stock’s current multiples are still not exorbitant yet, they don’t look cheap either.
Overall, I believe that it’s perhaps a bit late to buy AU stock, and it would instead be prudent to take some profits off the table here while waiting for a better entry point.
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. For more information please view the Barchart Disclosure Policy here.
