If you are a dividend investor, chances are you haventthought much about gold stocks. But with the price of bullion now running above $1,400 (U.S.) per ounce, gold companies are experiencing tremendous inflows of cash. Many will pass on a good chunkto shareholders in the form of higher dividends –as highlighted by Goldcorps ( GG) decision in October to double its dividend.
Dividends still small but dividend growth should pick up
The dividends paid by gold stocks are still relatively small. According to Luke Burgess, the top three yields to be found at this time are:
Harmony Gold (HAR) 2.51% Gold Fields (GFI) 1.25% Barrick Gold ( ABX) 1.05%
However, the cash-flow spigot has only recently been opened, says Motley Fool writer Christopher Barker. I expect yields among the shareholder-friendly operators to expand further and faster than many Fools anticipate.
Pressures to increase dividends
Institutional and other investors are calling for more dividend increasesfrom gold companies, rather than spending on acquisitions. Already there has been a noticeable uptick in dividend growth this year. For example, Yamana Gold (AUY) increased its dividend in March and has since doubled it. Other recent hikes include those by:
Newcrest Mining (ASX), 33% Newmont Mining (NEM), 50% Eldorado Gold (EGO), started paying a dividend in February