Centerra Gold Inc. (CGAU): Among the Best Gold Dividend Stocks to Buy According to Analysts

Centerra Gold Inc. (CGAU) has been gaining traction among analysts as a top gold dividend stock, with several positive ratings and price target revisions. The company's strong financial performance, robust cash flow, and consistent dividend payouts have contributed to its appeal. In this article, we will explore the key factors driving analysts' positive outlook on CGAU and discuss the risks and challenges facing the company.

Analyst Ratings and Price Targets

Several analysts have maintained positive ratings for CGAU, with some raising their price targets. For instance, RBC Capital Markets adjusted its price target on CGAU to CA$11 from CA$12, while keeping its Outperform rating. BMO Capital also maintained its Outperform rating on the company after its molybdenum feasibility study, raising its price target to C$12.00. These positive ratings and price target revisions reflect analysts' confidence in CGAU's growth prospects and dividend sustainability.

Strong Financial Performance and Cash Flow

CGAU has demonstrated consistent financial growth, with revenue increasing by 28.78% to $1.09 billion in 2023 compared to the previous year's $850.19 million. Although the company reported losses of -$81.28 million in 2023, this was a 5.27% improvement from the previous year. CGAU's strong cash flow from operating activities and significant cash and cash equivalents balance of $625 million further support its financial strength.

Consistent Dividend Payouts

CGAU has a history of paying dividends to shareholders, with a quarterly dividend of C$0.07 per common share declared in February 2025. The company's consistent dividend payouts, along with its strong financial performance and cash flow, contribute to its appeal as a top gold dividend stock.

Growing Mineral Reserves and Resources

In 2024, CGAU announced an increase in its mineral reserves and resources, including an initial resource at Goldfield. This suggests that the company has a strong pipeline of future production, which can support its dividend payouts and growth prospects.

Strategic Investments and Partnerships

CGAU has made strategic investments and formed partnerships with other companies, such as Dryden Gold Corp. and Kestrel Gold Inc. These collaborations can lead to further growth and exploration opportunities, which can enhance the company's dividend sustainability and growth prospects.

Risks and Challenges

While CGAU's positive outlook is supported by several factors, investors should be aware of the key risks and challenges facing the company:

1. Commodity Price Volatility: The gold mining industry is subject to significant commodity price volatility. A decline in gold prices could lead to reduced revenue and profitability, making it difficult for CGAU to maintain its dividend payouts.
2. Operational Risks: Operational challenges, such as production delays, equipment failures, or labor disputes, can impact CGAU's ability to generate cash flow and sustain dividends.
3. Geopolitical Risks: CGAU operates in various countries, including Turkey and Canada, exposing it to geopolitical risks. Political instability, changes in regulations, or disputes with local communities could disrupt operations and impact dividend sustainability.
4. Exploration and Development Costs: CGAU invests in exploration and development projects to maintain and grow its mineral reserves. High costs associated with these activities could strain cash flow and impact dividend payouts.
5. Debt and Financing Risks: CGAU may face challenges in accessing financing or managing its debt obligations, which could impact its ability to sustain dividends.

To mitigate these risks and ensure long-term dividend sustainability, CGAU should focus on diversifying its operations, maintaining a strong balance sheet, and effectively managing its costs and cash flow. Additionally, CGAU should consider maintaining a conservative dividend payout ratio to ensure that it has sufficient cash flow to cover both dividends and operational expenses.

In conclusion, Centerra Gold Inc. (CGAU) is among the best gold dividend stocks to buy according to analysts, thanks to its strong financial performance, robust cash flow, consistent dividend payouts, and growing mineral reserves and resources. However, investors should be aware of the key risks and challenges facing the company and consider its ability to mitigate these risks to ensure long-term dividend sustainability. By focusing on diversification, strong balance sheet management, and effective cost and cash flow management, CGAU can maintain its position as a top gold dividend stock.