Let’s get proper to it: Lundin Gold (TSX:LUG) could possibly be the greatest dividend inventory within the gold sector proper now, and most Canadian earnings buyers nonetheless haven’t seen.
It generated over US$900 million in free money circulation final yr, paid out greater than US$664 million in dividends, and simply declared one other quarterly dividend of US$1.15 per share. At present costs, that works out to a yield of roughly 4.6%.
Valued at a market cap of $23.7 billion, Lundin is a high-margin gold producer with among the finest mines on the planet sitting at full stride.
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A blue-chip gold mine
Fruta del Norte is positioned in southeast Ecuador and is 100% owned by Lundin Gold. The typical gold grade is 9.5 grams per ton, which is a number of instances greater than most main gold mines globally. The upper the grade, the extra gold you get per ton of rock processed, and the decrease your prices.
In 2025, money working prices got here in at US$838 per ounce. The typical realized gold worth for the yr was US$3,594 per ounce. That’s a primary margin of 72%. Only a few companies in any business function at these margins, not to mention a mining firm.
The mill processed over 1.8 million tons final yr at a median of 5,009 tons per day, a file. The corporate is now focusing on 5,500 tons per day in 2026, with a broader enlargement research underway to push past that.
The TSX dividend inventory ended 2025 with US$630 million in money and no significant debt. That form of steadiness sheet provides administration flexibility to continue to grow with out asking shareholders for cash.
The dividend construction is constructed to ship
Lundin has a set part of US$0.30 per share per quarter, which is the baseline. Then there’s a variable part tied on to free money circulation. Within the fourth quarter of 2025, that variable portion was US$0.85 per share, reflecting 100% of normalized free money circulation (FCF) for the quarter, properly above the corporate’s said coverage minimal of fifty%.
The This autumn complete payout of US$1.15 per share amounted to roughly US$278 million. For the complete yr, Lundin paid out US$664 million in dividends whereas nonetheless ending with US$630 million within the financial institution.
FCF is forecast to enhance to US$1.7 billion in 2026 and US$1.71 billion in 2027, which ought to help additional dividend hikes.
A brand new ore asset
Revenue buyers typically fear {that a} large dividend comes at the price of future progress. Nevertheless, Lundin Gold simply added a brand new deposit, known as FDNS, or Fruta del Norte South, into its mineral reserves for the primary time.
Underground improvement towards that deposit is now underway, with roughly $30 million to $35 million in capital budgeted for 2026. CEO Jamie Beck described FDNS as a complementary addition to current mining operations: not an enormous overhaul, however a gradual extension of mine life and manufacturing at present ranges.
The corporate additionally has 5 copper-gold porphyry targets recognized on its broader land package deal, a few of that are posting extraordinary drilling outcomes. At Sandia, the perfect intercept thus far got here in at 322 metres, with 1.08% copper equal close to the floor.
Complete confirmed and possible reserves now stand at 5.85 million ounces, up 6% year-over-year, even after accounting for 2025 mining depletion. Mine life is at the moment estimated at roughly 12 years, and that quantity is probably going conservative given ongoing exploration success.
For Canadian buyers searching for rapid earnings backed by a genuinely world-class asset, Lundin Gold deserves to be close to the highest of the listing.
