Invest $5,000 in This Dividend Stock for $145.75 in Passive Income

Opportunity is not just in growth but also in dividends. Mining stocks rarely attract dividend seekers due to commodity price volatility. Yet when commodity cycles peak, dividends flow in. One such commodity is gold. Last year, Lundin Gold (TSX:LUG) distributed a total of $2.75 in dividends per share, of which the fixed dividend was only $0.60, and the performance-based variable dividend was $2.15.

Had you invested $5,000 in Lundin Gold at the start of 2025, when it was trading at $31, a $5,000 investment would have provided $442 in annual dividend income and 300% in capital appreciation. That $5,000 would now be worth $15,690.

Should you invest $5,000 in this stock for dividends?

Lundin Gold stock has rallied alongside the gold price rally. Today gold is trading around US$4,400–USS$4,600. While the gold price has slipped drastically after the Iran war, it will likely increase as oil prices stabilize and global central banks rush to fill their gold reserves depleted in the energy shock.

The 15% gold price correction from US$5,200 to US$4,400 in March has created a buying opportunity as Lundin Gold’s share has dipped 26%. When the gold price rises, the stock will also surge. Rising gold prices could mean higher dividend payouts in 2026.

Understanding Lundin Gold’s dividend policy

Like all gold miners, Lundin Gold allocates capital to exploration and sustaining the mine. Lundin Gold used the gold price surge to become debt-free in 2024. Now it has one of the lowest all-in-sustaining costs (AISC).

As per its dividend policy, it allocates US$300 million for its $0.60 fixed dividend. After paying the fixed dividend, the company distributes at least 50% of the remaining normalized free cash flow (FCF) as variable dividends. With low cost and capital expenditure, a higher gold price will convert to more FCF, which in turn will result in higher payouts. In 2025, it earned $926 million in FCF.

The year 2026 started on a higher gold price of US$5,000-plus, increasing the probability of higher dividends. Lundin Gold assumed an average gold price of $4,000 per oz. for 2026. It expects to produce 475,000 to 525,000 oz of gold at an AISC of $1,110 and $1,170 per oz in 2026.

In 2025, it sold 503,330 oz at an average realized price of $3,594. Even if the miner sustains its existing production and the gold price remains above $4,000 in 2026, Lundin Gold could distribute $2.75 in annual dividends.

Invest $5,000 in this dividend stock for $145.75 in passive income

If you invest $5,000 today, you can get 53 shares of Lundin Gold that could pay $145.75 in passive income in 2026. While the amount represents just 2.9% yield, it is the stock price rally that can help you catch the momentum. As the stock price grows, you could sell a few shares and buy stable dividend-paying stocks like Enbridge. Because when the gold price rises, the stock price of other sectors dependent on economic growth falls.

The gains from Lundin Gold can help you buy more shares of Enbridge and lock in a yield of over 6%. Now may not be a good time to buy energy stocks, as they could fall sharply once the oil price reaches a certain limit where consumption takes a hit.

Investor takeaway

Lundin Gold offers a unique blend of growth and dividend income. Its low costs, debt‑free balance sheet, and variable dividend policy make it a compelling choice for investors seeking opportunistic buys. While volatility in gold prices remains, the potential for higher dividends in 2026 is strong.

The post Invest $5,000 in This Dividend Stock for $145.75 in Passive Income appeared first on The Motley Fool Canada.

Should you invest $1,000 in Lundin Gold Inc. right now?

Before you buy stock in Lundin Gold Inc., consider this:

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* Returns as of March 24th, 2026

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Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.