HMY vs. AU: Which Gold Mining Stock is the Better Pick Now?

Harmony Gold Mining (HMY) and AngloGold Ashanti (AU) are benefiting from high gold prices, which have risen roughly 26% YTD amid economic uncertainties and central bank buying. While both are positioned to benefit, AngloGold Ashanti appears to be the more favorable investment option due to its higher dividend yield (3.1% vs 1.2%), healthier dividend growth rate (32.1% vs 7.3%), and higher earnings growth projections for 2025; AU sports a Zacks Rank #1 (Strong Buy) while HMY has a Zacks Rank #3 (Hold).

Analysis

Gold prices have surged approximately 26% year-to-date, currently trading above $3,300 per ounce, buoyed by investor demand for safe-haven assets amid global economic uncertainties, aggressive U.S. trade policies, and significant central bank gold purchases. Both Harmony Gold Mining (HMY) and AngloGold Ashanti (AU) are well-positioned to capitalize on this favorable gold price environment. Harmony, South Africa's largest gold producer by volume (1.56 million ounces in FY24), is advancing key development projects such as Wafi-Golpu in Papua New Guinea, with an estimated 13 million ounces gold reserve, and the Eva Copper project in Australia, aiming to transition into a low-cost gold and copper producer. HMY reported a 53% increase in net cash to $592 million at the end of Q3 fiscal 2025 and offers a 1.2% dividend yield with a 7.3% five-year annualized growth rate. However, Harmony faces significant headwinds from rising operational costs, with all-in-sustaining costs surging 24% and total cash costs climbing 22% year-over-year in Q3 fiscal 2025, primarily due to increased labor and electricity expenses. Conversely, AngloGold Ashanti is pursuing a strategy of organic and inorganic growth, notably through the acquisition of Centamin, which elevated the proportion of gold production from its Tier 1 assets to 67% and increased mineral reserves to 31.2 million ounces. AU is focused on optimizing its Obuasi project, targeting 400,000 ounces of annual production by 2028, and enhancing operations at Siguiri. Financially, AU demonstrated robust health with free cash flow increasing nearly seven-fold to $403 million in Q1 2025, adjusted net debt reduced to $525 million, and liquidity standing at $3 billion. AU offers a more attractive dividend yield of 3.1%, a strong five-year annualized dividend growth rate of 32.1%, and a policy to return 50% of annual free cash flow to shareholders. Year-to-date, HMY stock has risen 76% and AU stock has rallied 86.7%, both outperforming the Zacks Mining – Gold industry’s 47.5% increase. While HMY trades at a lower forward P/E multiple of 7.61 compared to AU's 9.73 (both below the industry average of 13.82X), AU shows stronger forward-looking fundamentals. The Zacks Consensus Estimate for AU’s 2025 EPS implies 95% year-over-year growth with estimates trending upwards, significantly outpacing HMY’s projected 10.2% EPS growth with stable estimates. Consequently, AU holds a Zacks Rank #1 (Strong Buy), whereas HMY is rated #3 (Hold).

Key Decisions for Investors

• Investors seeking gold sector exposure may find AngloGold Ashanti (AU) a more compelling option due to its higher dividend yield (3.1% vs HMY's 1.2%), significantly stronger dividend growth rate (32.1% vs HMY's 7.3%), and substantially higher projected 2025 EPS growth (95% vs HMY's 10.2%).
• Despite Harmony Gold's (HMY) attractive development pipeline, including the Wafi-Golpu and Eva Copper projects, investors should exercise caution due to its considerable exposure to rising operational costs, evidenced by a 24% surge in all-in-sustaining costs in Q3 FY25, which could pressure margins.
• AngloGold Ashanti's (AU) robust free cash flow generation, successful debt reduction, increased proportion of production from Tier 1 assets, and a new dividend policy targeting 50% of free cash flow position it well for potential outperformance and enhanced shareholder returns in the current high gold price environment.