Royal Gold (NASDAQ: RGLD) is a precious metals stock, but it is not a miner. That is an important distinction that could make it the best option for more conservative dividend investors looking to add gold to their portfolios. Here's a look at what the company does and why you might want to use it to increase your portfolio's diversification.

There are a number of ways to add gold to a portfolio. The most obvious is to buy physical gold, but there are material transaction costs, you have to store it, and it will always be exactly what you bought, ounce for ounce. You could buy a gold-owning exchange-traded fund, which avoids the storage issue and minimizes transaction costs. But it will simply track gold prices without the chance for business growth over time. That's why many investors prefer miners, which can expand their businesses and, thus, increase in value over time.

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Source Fool.com