Key Points

• Iamgold reported double-digit revenue growth and triple-digit EPS growth in the third quarter.

• The gold mining stock is trading for less than 10 times trailing and forward earnings.

• Iamgold is buying back stock, a signal that it may be able to start a dividend policy.

• 10 stocks we like better than Iamgold ›

Iamgold (NYSE: IAG) is a mid-tier gold mining company that is on the path to becoming a senior major. It's a highly profitable commercial producer with gold mines in Ontario, Quebec, and Burkina Faso. The reason it remains a mid-tier company, not yet in the ranks of senior mining companies such as Newmont (NYSE: NEM) or Barrick Gold (NYSE: B), is that it isn't producing millions of ounces of gold per year.

However, it clearly is getting there. It has said it expects to produce 720,000 to 820,000 ounces of gold this year. It has also paid down its debt substantially. The company will have to do one other thing to be truly considered a major miner -- deliver a dividend. I believe it is on track to do that before the end of next year. Here's why.

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It has turned its balance sheet around

Driven by sustained gold prices and expanding operational throughput, the company eliminated its previous net debt position, which stood at $1.015 billion in mid-2025, and, as of the second quarter, shifted to a net cash position of $52 million. The early repayment of its debt has reduced interest expenses and loosened up capital for stock buybacks and potential dividends.

With more than $1.35 billion in total available liquidity, including more than $501 million in cash, Iamgold's balance sheet no longer requires defensive capital retention, clearing the structural path for returning capital to shareholders.

Côté Gold is becoming a cash machine

The company owns 70% of the Côté Gold mine in Ontario. The ramp-up of production in that mine should give Iamgold a low-cost, long-life foundational asset that fundamentally alters the company's free-cash-flow (FCF) profile. Côté is ramping toward a target throughput of 40,000 tons per day, with 2026 attributable production guidance of 270,000 to 310,000 ounces.

The company, thanks to the higher gold price, is seeing high-margin cash generation across all of its mines, including Côté, Essakane, and Westwood. Iamgold generated $893 million in mine-site FCF in the first half of 2026 alone. This puts its trailing-12-month free-cash-flow yield near 14%.

In the second quarter, the company reported revenue of $293 million, up 27.9% year over year, and earnings per share (EPS) of $0.42, up 223% over the same period last year.

There's a clear path to a dividend

With major mine construction completed and debt cleared, Iamgold is entering the operational phase, where mid-tier gold producers shift their focus to capital returns. Historically, the company withheld dividends to fund the massive upfront capital expenditures required to construct Côté Gold. With expansion capex normalizing and major construction in the rearview mirror, operational cash flows can now support shareholder distributions.

Management has formally signaled that evaluating shareholder return frameworks, specifically dividend policies and share buybacks, is a near-term capital priority as free cash flow accumulates. It returned $150 million through stock buybacks in the second quarter.

Competitors with similar operational scale and net cash balance sheets typically institute a base quarterly dividend, complemented by a variable component tied to excess free cash flow.

The stock is still a bargain for now

Considering that its shares are up more than 18% so far this year, the stock is still a relative bargain, trading at less than 10 times trailing earnings and forward earnings. That makes it a better deal than Newmont or Barrick and Iamgold's mid-tier competitors, such as Alamos Gold and Eldorado Gold.

Once Iamgold institutes a dividend, it will demonstrate the financial strength that will attract a broader range of investors, particularly income-oriented investors. Gold mining is a highly volatile, cash-heavy business, but if Iamgold can add a dividend, it signals to investors the company has arrived as a major miner.

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James Halley has positions in Newmont. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.