This Gold Producer's Stock Has Doubled in the Past Year and It Just Announced a 60% Hike to Its Dividend
Key Points
Alamos Gold reported record free cash flow for 2025, enabling it to raise its dividend -- significantly.
The company has plans to nearly double its production by the end of the decade.
Although the stock has generated strong returns, its valuation remains modest.
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Gold prices have been soaring over the past year, and companies involved with gold mining have been generating fantastic results. Investing in these companies can be a good way for investors to take advantage of rising gold prices, as in some cases, their share prices can rise even higher than simply investing in gold.
One gold mining stock that has performed exceptionally well over the past year is Alamos Gold (NYSE: AGI). It has risen by around 120% during that time frame, as the business has been booming. Recently, it also announced a generous increase to its dividend -- a mammoth 60% rate hike.
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Is Alamos Gold stock a no-brainer buy right now?
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Record free cash flow prompts Alamos to significantly boost its payout
Alamos is a Canadian-based company that has multiple mines in Canada and Mexico. The company is growing its operations, and by 2030, it projects that its production will roughly double, to 1 million ounces per year. It generated a record $352 million in free cash flow in 2025, even as the company says its production was lower than expected. The results showed a fantastic year overall for the business, with Alamos' net earnings more than tripling to $886 million.
A big reason for its success is due to rising gold prices. In just the past year, gold has gone from less than $3,000 per ounce to more than $5,000. Alamos and other gold producers have been raking in some great results due to the rising prices.
In light of the strong numbers and more growth expected in the future, management felt comfortable in announcing a massive 60% increase to its quarterly dividend, to $0.04 per share. While Alamos' yield remains fairly light at just 0.3%, there may be more increases in the future as the company expands its operations and it strengthens its financials.
Alamos stock can make for an excellent long-term investment
Although Alamos stock has amassed some impressive returns over the past year, it's still not expensive, as it trades at a price-to-earnings multiple of 24, which is right in line with the S&P 500 average. While the stock's dividend may be modest, Alamos's payout ratio is less than 10%, even when factoring in the hefty dividend increase; there's still plenty of room for the dividend to rise further.
If you want exposure to gold and want to invest in an excellent mining company, then Alamos could make for a solid choice today. Between some solid growth plans, a reasonable valuation, and a growing dividend, there are multiple reasons to load up on the stock today and hang on for the long term.
Should you buy stock in Alamos Gold right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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