3/8/25
Franco-Nevada Corporation (NYSE: FNV) stands out in the gold and precious metals sector, but not in the way most mining stocks do. This company doesn’t actually own or operate any mines. Instead, it takes a royalty and streaming approach—providing capital to mining companies in exchange for a share of future production. That means Franco-Nevada benefits from rising commodity prices without the operational headaches that traditional miners face.
For dividend investors, this setup offers a compelling mix of steady cash flow, financial resilience, and long-term growth. While it won’t make the list of high-yield income stocks, Franco-Nevada has built a reputation for consistently growing its dividend. With zero debt and a business model designed to weather downturns, it’s a different breed of dividend payer in the materials sector.
Key Dividend Metrics
💰 Dividend Yield – 1.06% (forward)
📈 5-Year Average Dividend Yield – 0.93%
📊 Payout Ratio – 37.85%
💲 Annual Dividend (Forward) – $1.52 per share
📅 Next Dividend Payment Date – March 27, 2025
📆 Ex-Dividend Date – March 13, 2025
🚀 Dividend Growth Streak – 16 consecutive years
Dividend Overview
Franco-Nevada isn’t the stock you buy for immediate income, but it is a reliable choice for those who want dividends that keep growing over time. The company has never cut its dividend since going public in 2007, an impressive track record given the cyclical nature of the mining industry.
What makes this dividend particularly appealing is its sustainability. Unlike companies that stretch their balance sheets to keep payouts intact, Franco-Nevada funds its dividends through strong free cash flow. A payout ratio of 37.85% leaves plenty of room for future increases, ensuring that shareholders continue to see rising income even during gold price fluctuations.
The current yield sits just above 1%, which won’t excite income-focused investors. However, the stock’s ability to deliver consistent growth—both in dividends and share price appreciation—makes it a strong candidate for those who value stability and long-term returns over a high upfront yield.
Dividend Growth and Safety
A growing dividend backed by a solid financial foundation is what makes Franco-Nevada a standout in the materials sector. Over the past five years, dividend growth has averaged over 6% annually, a pace that outstrips inflation and ensures investors maintain real purchasing power.
Several factors support the long-term safety of Franco-Nevada’s dividend:
✔ Free cash flow remains strong at $644.17 million, providing more than enough coverage for dividend payments.
✔ The company carries no debt, which eliminates interest expenses and financial strain.
✔ Its royalty model ensures consistent revenue, even when mining companies face operational challenges.
These elements make Franco-Nevada’s dividend about as secure as it gets in the commodities space.
Chart Analysis
Price Movement and Trend
Franco-Nevada’s stock has been in a strong uptrend over the past several months. The price has been climbing steadily since late last year, with a particularly sharp rally in early 2025. Recently, the stock has been consolidating near its highs, suggesting some hesitation among buyers but no significant selling pressure yet.
The 50-day moving average is trending upward and is now well above the 200-day moving average, a bullish signal indicating that the stock has regained momentum. Earlier in the year, the stock struggled to maintain an uptrend, but the breakout above the moving averages confirmed renewed strength.
Support and Resistance Levels
The recent high around $146.70 appears to be the next resistance level. If the stock can break through that, there could be more upside potential. On the downside, the $130 level, where the 50-day moving average is currently sitting, looks like a strong support zone. A drop below that could indicate a trend reversal or at least a deeper pullback.
Volume Analysis
Volume has been relatively steady, with occasional spikes during strong upward moves. The large volume bars seen in October and again in late January suggest institutional participation, which often supports sustainable trends. However, recent volume levels appear lower, meaning the stock may need fresh buying pressure to continue higher.
Relative Strength Index (RSI)
The RSI indicator shows that the stock was in overbought territory earlier but has since cooled off slightly. The reading is still above the midpoint, meaning the stock is maintaining strength, but it is no longer at extreme levels that would typically precede a pullback. If RSI drops below 50, it could indicate that bullish momentum is fading.
Recent Price Action
The last five trading sessions have seen the stock fluctuating in a tight range, with no clear directional move. Wicks on both the upper and lower ends of the candles indicate indecision. Buyers are still stepping in on dips, but sellers are also active near recent highs. If this sideways movement continues, it may signal a period of consolidation before the next breakout.
Analyst Ratings
Franco-Nevada Corporation (NYSE: FNV) has recently seen a mix of analyst opinions, with some upgrading their outlook while others remain cautious. The consensus rating for the stock stands at “Moderate Buy,” with an average price target of $146.71. This suggests a slight upside potential from its current levels, though opinions are divided on whether the stock is fairly valued or still has room to run.
🔼 Upgrades
📈 UBS initiated coverage with a “Buy” rating and set a price target of $160. Analysts highlighted Franco-Nevada’s strong financial position and low-risk revenue model, which benefits from royalties and streaming agreements rather than direct mining operations. The company’s ability to generate steady cash flows without exposure to operational risks was a key factor behind the bullish outlook.
💡 TD Securities also upgraded the stock from “Hold” to “Buy.” While the specific price target was not disclosed, the firm pointed to Franco-Nevada’s stable growth and recent acquisitions as reasons for optimism. The expansion of its royalty portfolio was seen as a positive driver for long-term revenue.
🔽 Downgrades
⚠️ BofA Securities downgraded Franco-Nevada from “Buy” to “Neutral,” adjusting its price target from $142 to $139. The analysts cited valuation concerns, noting that after strong price appreciation, the stock might have limited upside in the near term. They believe the market may have already priced in much of its expected growth.
📉 CIBC lowered its price target for Franco-Nevada to $135, contributing to a slight pullback in the stock. The downgrade was based on commodity price fluctuations and how they could impact revenue. While Franco-Nevada’s model insulates it from mining risks, it still depends on the performance of gold and other precious metals, which have been volatile.
🎯 Consensus Price Target
The combined analysis of multiple firms has resulted in an average price target of $146.71 for Franco-Nevada. This reflects a balanced view—acknowledging its strong fundamentals and ability to generate consistent cash flow, while also recognizing valuation risks and potential headwinds from commodity price movements. Investors watching the stock may want to weigh these factors when making decisions.
Earnings Report Summary
Franco-Nevada is gearing up to release its 2024 year-end earnings on March 10, 2025, before the market opens. Investors are watching closely to see how the company performed over the past year, especially with the fluctuations in gold prices and shifts in production from some of its key assets.
One of the biggest highlights ahead of the report is the company’s decision to raise its quarterly dividend from $0.36 to $0.38 per share. That may not seem like a huge jump, but it marks the 18th straight year of dividend increases. For income-focused investors, that kind of consistency is hard to ignore, especially in the volatile world of commodities.
Analysts have been adjusting their forecasts leading up to the release, with some lowering their earnings estimates. One notable revision brought expected Q4 earnings per share down to $1.27 from a previous estimate of $1.34. That shift seems to be driven by a combination of lower gold deliveries from certain mines and some production delays at newer operations.
Looking back at the company’s last reported quarter, Franco-Nevada posted an adjusted EBITDA of $236.2 million and net income of $153.9 million. The company is still in an incredibly strong financial position, with $2.3 billion in available cash and no debt on the books. That kind of balance sheet strength is rare in the mining and royalty space, giving Franco-Nevada a lot of flexibility even when commodity prices swing.
One area where the company had to adjust expectations was in its total Gold Equivalent Ounces (GEOs) sold. Initially, guidance was set between 480,000 and 540,000 GEOs for the full year, but that was lowered to a range of 445,000 to 465,000. The change was largely due to lower-than-expected output from the Candelaria mine and slower-than-anticipated ramp-ups at newer projects like Tocantinzinho and Greenstone. Despite that, full-year revenue is still expected to land between $1 billion and $1.1 billion, helped by strong gold prices.
The upcoming earnings call on March 10 will give investors a clearer picture of how the company navigated these challenges and what the outlook is for 2025. With a rock-solid balance sheet and a dividend that just keeps growing, Franco-Nevada remains one of the more stable plays in the precious metals sector, even with some bumps in production.
Financial Health and Stability
One of Franco-Nevada’s biggest advantages over traditional mining stocks is its rock-solid balance sheet. Most companies in the industry carry heavy debt loads due to the capital-intensive nature of mining, but Franco-Nevada sidesteps that risk entirely.
✔ Cash on hand totals $1.32 billion, giving the company immense financial flexibility.
✔ Debt remains at zero, a rare and impressive feat for a company tied to the commodities market.
✔ A current ratio of 23.39 signals that short-term liquidity is extremely strong.
While recent impairments led to a net loss on paper, the core business remains highly profitable. The company operates with a massive 65.81% operating margin, highlighting just how efficient its royalty model is compared to traditional miners.
Valuation and Stock Performance
Franco-Nevada is a high-quality stock, but it doesn’t come cheap. It trades at 32.88 times trailing earnings and 34.84 times forward earnings, which are well above industry averages. Investors are willing to pay a premium for its stability and low-risk business model, but that also means future upside could be somewhat limited unless gold prices continue to rise.
Despite its rich valuation, the stock has performed well, climbing 25.95% over the past year. That’s more than double the 12.74% gain of the S&P 500. A beta of 0.65 indicates that it’s less volatile than the broader market, making it a relatively steady performer within the materials sector.
Stock performance metrics to keep in mind:
📈 52-Week High – $146.70
📉 52-Week Low – $111.98
📊 50-Day Moving Average – $133.07
📊 200-Day Moving Average – $125.82
Momentum has been strong recently, but with the stock near its highs, it may not offer the best entry point for new investors.
Risks and Considerations
While Franco-Nevada has a strong business model, no stock is without risks. Here are some key factors that investors should keep in mind:
1️⃣ Commodity price fluctuations – Although the company doesn’t mine metals itself, its revenue depends on the prices of gold, silver, and oil. If commodity prices fall, so will Franco-Nevada’s earnings.
2️⃣ High valuation – The stock trades at a premium, meaning there’s little room for error. If growth slows, shares could be vulnerable to a pullback.
3️⃣ Recent earnings hit – A $605.8 million net loss due to asset impairments was a red flag, even though it was a non-cash charge.
4️⃣ Interest rate risk – With a relatively low yield, the stock may face pressure if interest rates remain high, as income-focused investors could favor bonds instead.
That said, the company’s asset-light model, debt-free balance sheet, and steady cash flow help reduce many of these risks.
Final Thoughts
Franco-Nevada is a different kind of dividend stock. It’s not about high yields, but about long-term reliability, steady dividend growth, and a business model that minimizes risk in a volatile sector.
For investors who prioritize:
✅ Consistent dividend growth with a 16-year track record
✅ Strong free cash flow supporting future payouts
✅ A debt-free balance sheet that adds financial security
✅ Steady stock performance with lower volatility than peers
Franco-Nevada offers a compelling case. It’s not the best choice for those seeking high-yield income, but for those looking for an inflation-hedged, low-risk dividend growth stock, it’s a name worth considering.
Recent Comments