Trump’s Greenland Threats Scaring You Off? Buy This Dividend Stock as a Hedge

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Trump’s Greenland Threats Scaring You Off? Buy This Dividend Stock as a Hedge.

investing ideas :: 7hrs ago :: source - barchart

By Mohit Oberoi

Geopolitical tensions have been quite elevated over the last few weeks following the U.S. actions in Venezuela. In what could further fuel geopolitical tensions, President Donald Trump has upped the ante in his bid to seize Greenland. While the president declined, yet again, to comment on whether he would use force to gain control of Greenland, he has threatened massive tariffs on countries opposing his demands.

Trump Has Threatened to Seize Greenland

Meanwhile, European capitals, which largely refrained from retaliating against Trump’s tariffs last year and instead quietly enhanced cooperation with other trading partners, particularly China, have vowed to retaliate. In a symbolic but unprecedented move, EU countries have ramped up military presence in Greenland in support of Denmark against the U.S., which happens to be the de facto leader of NATO, whose Article 5 calls for collective defense.

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One argument would be that eventually sanity would prevail, and just like last year’s “Liberation Day” tariffs, Trump would gradually tone down the rhetoric. However, Trump’s threats to take over Greenland and the faceoff with NATO allies are set to leave a scar that won’t go away so easily.

U.S. allies have been warming up to China, and Canadian Prime Minister Mark Carney visited China last week, marking the first visit by a Canadian PM to the communist country in eight years. The country, which followed the U.S. footsteps in imposing a 100% tariff on electric vehicle imports from China in 2024, has lowered it to 6.1%, albeit with an annual cap.

Precious Metals Have Soared to Record Highs

The global order hasn’t looked this shaky in decades, with new realignments happening among major countries. While there would be winners and losers in the process, gold as an asset class might continue to shine. Precious metals were the best-performing asset class last year, and both gold and silver have hit record highs amid Trump’s threats over Greenland.

While the structural gold story that’s built around de-dollarization, central bank buying sprees, and portfolio diversification remains intact, the recent rise in geopolitical tensions could act as a short-term catalyst that can take prices higher.

In the gold mining space, I find Agnico-Eagle Mines (AEM) as one of the safest bets. Along with the expected capital gains, investors can also vouch for a dividend bonanza over the next couple of years as gold mining companies are literally overflowing with cash following the stellar rally in precious metals.

AEM Is a Low-Risk Gold Miner

AEM is a senior miner with mines in “safe” jurisdictions in Canada, Mexico, Australia, and Finland, with Canada accounting for a lion’s share of its production as well as reserves. The company is working on further boosting its reserves and production through projects like Detour underground, Hope Bay, and Upper Beaver. AEM expects these projects—all of which are organic growth opportunities—to represent between 1.3 million and 1.5 million ounces in annual gold production.

While AEM expects its annual production to be stable between 3.3 million ounces and 3.5 million ounces between 2025 and 2027, new projects should help boost its production in the long term.

AEM is in the second quartile of the global cost curve and expects its all-in sustaining costs (AISC) to be around $1300 per troy ounce this year. A combination of mining assets in safe jurisdictions, a rising long-term production profile, and low AISCs makes AEM one of the best names in the gold mining space.

Moreover, AEM has a strong balance sheet, and at the end of Q3 2025, it had a long-term gross debt of a mere $196 million while its net debt was negative $2.2 billion. The improvement in AEM’s balance sheet hasn’t gone unnoticed by credit rating agencies, and last year Moody’s upgraded its rating from Baa1 to A3.

Agnico-Eagle Mines Should Increase Its Dividend

Agnico-Eagle Mines aims to return around a third of its free cash flows to shareholders in the form of dividends and share repurchases. While the company prioritized share repurchases last year, it should announce a dividend hike for 2026. Currently, the stock’s dividend yield is only about 0.8%, but given the massive free cash flows that the company is generating, it might increase shareholder payouts, as there isn't much deleveraging opportunity left.

Currently, AEM trades at a forward enterprise value to earnings before interest, tax, depreciation, and amortization (EV-to-EBITDA) multiple of around 10.5x, which is admittedly higher than the historical average. However, given the positive outlook for gold and AEM’s financial strength, I believe the multiples aren’t unreasonable.

AEM Stock Forecast

AEM has a consensus rating of “Strong Buy” from the 18 analysts polled by Barchart, even as its mean target price of $210.95 is just about 7% higher than current price levels. However, the anomaly is predominantly due to analyst action not keeping with the price action—something we see across other gold mining stocks as well. Notably, Bank of America listed AEM as among its top commodity stock picks for 2026.

Looking at the recent analyst action, last week Raymond James raised AEM’s target price from $182 to $225, while Citigroup raised it to a Street-high of $252. More brokerages might follow suit over the next month to reflect the strength in gold prices. Overall, AEM remains one of the best ways to play the gold story, especially for investors who are looking for a relatively safer bet in the space.

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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