From 50-pound bags of rice to pet insurance to solar panel installation, the range of items and services that Costco (NASDAQ: COST) provides its customers is remarkable. One of the most popular items recently, though, is gold bullion. Of the 101 stores that Bloomberg surveyed earlier this month, 77% reported that they had sold out of bars of the yellow metal.

But buying bullion only will translate to growth in your investment if the price of gold rises -- something that is far from a sure thing. Investors looking to gain gold exposure, on the other hand, would be better off loading up on a dividend-paying gold stock. Fortunately for them, Agnico Eagle Mines (NYSE: AEM), Centerra Gold (NYSE: CGAU), and Franco-Nevada (NYSE: FNV) are three top dividend-paying gold stocks that look especially lustrous right now.

Agnico Eagle offers a conservative approach to the yellow stuff

With a history spanning more than 60 years, Agnico Eagle has emerged as one of the leading gold producers available to investors. It operates a sizable portfolio of 11 assets located in four countries, and forecasts gold production of approximately 3.45 million ounces in 2024. It has made solid progress toward achieving this guidance, reporting gold production of 1.8 million ounces through the first half of the year. The future seems bright as well, with about 54 million gold ounces of proven and probable reserves.

Agnico Eagle has paid a dividend for 41 consecutive years, demonstrating a strong commitment to rewarding shareholders. Should it pay a dividend of $1.60 per share in 2024 as management expects, the company will have hiked its dividend at a compound annual growth rate (CAGR) of more than 23% since it paid $0.03 per share in 2005. Investors who pick up Agnico Eagle stock and its 2% forward-yielding dividend can rest easy knowing that the company isn't imperiling its financial health to reward shareholders. Agnico Eagle has an investment grade balance sheet, and its payout ratio has averaged 64% over the past five years.

Your passive income stream can gleam with Centerra Gold

With a market capitalization of $1.5 billion, Centerra Gold may not be one of the largest gold stocks on the market. But what it lacks in size regarding market cap, it makes up for with its payout -- one of the most alluring dividends among its gold stock peers, with a forward yield of 2.9%. Adding to the stock's appeal right now is the fact that it's currently sitting in the bargain bin. Currently, shares of Centerra are valued at 4.3 times operating cash flow, a discount to their five-year average cash flow multiple of 5.6.

Like Agnico Eagle, Centerra is operating from a position of considerable financial strength. Whereas many gold producers rely heavily on leverage in order to develop their metal-producing assets, Centerra maintains a solid balance sheet which currently features zero debt and $592 million in cash on hand.

The company has two core projects in its portfolio: Mount Milligan and Oksut. But Centerra has several irons in the fire, positioning it for growth. Most notably, it plans on growing its molybdenum business by ramping up operations at its Langeloth molybdenum conversion facility. Management expects that when Langeloth achieves production capacity (about 40 million pounds annually), it will generate about $50 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) per year.

Franco-Nevada offers a unique approach to gold investment

For a slightly different approach to gaining gold exposure, investors may want to consider Franco-Nevada, a royalty and streaming company. By acting like specialized financiers, royalty and streaming companies provide gold mining companies with upfront capital for developing assets. In return, the royalty and streaming companies receive a percentage of the mine's sales, or the right to purchase the future production of a metal from a mine for a agreed-upon price.

Franco-Nevada has a formidable portfolio with interests in 432 projects. While 118 of these projects are currently in production, 38 projects are in the advance phase of development, and 276 are in the exploration phase, so there is a robust pipeline of growth projects. These projects represent a variety of commodities, from precious metals to oil and gas to platinum group metals. But it's gold that represents the company's bread and butter. In the second quarter of 2024, for example, gold accounted for 61% of the company's revenue. Oil was the second greatest contributor to quarterly revenue, accounting for 14% of sales.

Franco-Nevada's dividend currently provides a modest forward yield of 1.2%. While it's not as generous as that of Centerra or Agnico Eagle, it's better than the non-existent dividend investors who buy bullion receive. Moreover, the company's commitment to rewarding shareholders is clear. It has raised its payout for 17 consecutive years, suggesting that future dividend raises are likely.

Should you add some glitter to your portfolio with these gold stocks right now?

For those interested in diversifying their portfolios with a gold investment, buying bullion at Costco isn't the best option, since those gold bars will only prove to be successful investments if the price of gold continues to rise. Instead, investors would be better off buying shares of dividend payers Agnico Eagle and Centerra -- though the latter may appeal to those looking for a stock hanging on the discount rack. For the most conservative of investors, Franco-Nevada is a better option, as it's not exposed to the risks of developing assets like gold-producing companies are.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Centerra Gold and Costco Wholesale. The Motley Fool has a disclosure policy.

Instead of Buying Gold Bars From Costco, Buy These 3 Lustrous Gold Stocks was originally published by The Motley Fool