Is This the Best Time to Buy This Dividend Stock After 33% Decline?

The Iran war and the resulting rise in energy prices have taken a toll on global stock markets, and while there was a relief rally yesterday, March 23, the overall sentiment remains “risk-off.” Ideally, gold should have outperformed in such periods of geopolitical tensions, as it is the ultimate safe-haven asset. However, the precious metal has plunged into bear market territory and, in fact, has fared much worse than stocks over the last couple of weeks.

In my previous article, I listed AngloGold Ashanti (AU) as a “war stock” to buy. However, the stock has fallen sharply since then and is now down over 33% from its 2026 highs, even as it is still mostly trading flat for the year. AngloGold has among the most generous dividend policies in the gold mining space and paid record dividends last year as its cash flows surged due to the gold price rally.

AU Has a Variable Dividend Policy

AU intends to pay half of its free cash flows to investors as dividends and periodically tops up the regular quarterly dividend of 12.5 cents with true-up payments to reach its payout targets. While the dividend yield would be just 0.58% based on the regular dividend, the actual payout has been much higher over the last two years as the company shares the free cash flow largesse with investors in the form of supplemental true-up dividends. In this article, we’ll discuss whether it makes sense to buy the dip in AU or if investors would be better off staying away from the stock.

Why Is Gold Going Down?

To begin with, let’s examine why gold has been going down despite the stars seemingly aligned for a rally. Firstly, the oil price spike has stoked inflation concerns and lowered the probability of rate cuts. Fed Chair Jerome Powell summed up the state of U.S. inflation at last week’s post-meeting press conference and said, “The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation.” Theoretically, higher interest rates are negative for non-interest-bearing assets like gold. 

Traders have also been selling gold to cover losses in other risk assets or buy the dip elsewhere. Some of it might even be forced selling by those facing margin calls in stocks and oil futures. Gold has also fallen below its 50-day moving average, which often triggers a “sell” call for algo traders. Gold’s price action this month hasn’t been much different from March 2020, when the precious metal fell alongside other assets amid uncertainty over the Covid-19 pandemic.

What’s The Forecast for Gold Prices?

Brokerages generally maintain a bullish stance on gold. Notably, the long-term bullish thesis for gold remains intact and, if anything, looks even more promising after the Iran war. While the world had relative interstate peace for nearly two decades, things have changed for the worse since Russia invaded Ukraine in 2022. The Middle East has also been on a boil since the Oct. 7, 2023, attacks on Israel.

Then there is the de-dollarization drive of central banks as they diversify their reserves beyond the greenback. The massive increase in U.S. debt and the unsustainable fiscal deficit cost the world’s biggest economy its only top credit rating last year, and there looks to be no path towards a sane fiscal environment.

The debt problem is not limited to the world’s largest economy, and even China is grappling with a huge debt pile, which has lowered its ability to bail itself out from the slowdown with a bazooka of fiscal stimulus. Global debt increased by $29 trillion last year, which was the biggest buildout since the Covid-19 pandemic, according to data from the Institute of International Finance. Higher global debt, particularly sovereign debt, is a key risk for markets and supports gold’s long-term outlook.

Should You Buy the Dip in AU Stock?

Coming back to AngloGold Ashanti, the company has been optimizing its portfolio and selling stakes in some of its Tier 2 assets, which by definition have higher per-unit costs, while adding Tier 1 assets. The company’s balance sheet has improved spectacularly over the last couple of years, and it now holds more cash than it owes in debt. The combination of portfolio optimization and balance sheet improvement has helped AU bridge the valuation gap with other gold miners.

AU is ultimately a play on gold prices, and if anything, its price action is more sensitive to gold prices compared to many of its peers. The high leverage to gold prices helped AngloGold outperform the VanEck Gold Miners ETF (GDX) last year, but on the flip side, it tends to fall more than other gold miners when gold prices plunge, and its drawdown from the 2026 peak is much wider than GDX.

All said, I believe that gold prices are nearing their bottom and should close the year higher than where they are currently trading. While AU is still susceptible to a fall in case gold continues its downward journey, at these levels, I find it an attractive buy for long-term investors who can withstand the short-term volatility.