Gold stocks are not a place investors typically look for high dividend yields. No gold stock currently offers new investors even a 3 percent yield.
But that could soon change. A number of gold companies have been increasing their dividends at a rapid rate, some of which didn’t even offer a dividend until recently. A rising dividend means that investors who got in early, when the stock price was lower, actually earn more than the currently offered yield.
The rising price of gold likely has a lot to do with it. Gold prices are up nearly 30 percent over the last year, and more than 50 percent over the last two years. As a result, companies that mine the precious metal are prospering.
Gold miners are becoming increasingly flush with cash, and are passing on some of those extra earnings to shareholders. Here are three gold stocks that are growing their dividends the fastest:
- Gold Resource Corporation (AMEX: GORO): At 2.83 percent, this company boasts the highest dividend yield (60 cents a share) of any gold stock. What’s more remarkable is that Gold Resource didn’t start commercial production until July 2010, which was when it started paying dividends. Since then its stock has risen 66 percent, from $12.79 on July 1, 2010 to $21.26 in mid-afternoon trading today. The company just posted record profits in the third quarter, an 88 percent production increase over the previous quarter, and record net income of $15.2 million, or 29 cents a share. With zero debt, six gold and silver mining operations in Oaxaca, Mexico and having already returned $30 million in dividends to its shareholders in the last 16 months, Gold Resource’s market-leading dividend seems secure.
- Newmont Mining Corporation (NYSE: NEM): Newmont Mining is the world’s second-biggest gold producer, with a market capitalization of $34 billion. Its stock has risen 25 percent in the last two years. But it only recently started to grow its dividends. Newmont’s current dividend yield is 2 percent, more than double the yield in March even with a significant rise in the share price. That’s because in April the company announced that it would continue to raise its dividends as long as gold prices stayed high. With gold prices continuing to rise, that’s good news for investors in a company the Wall Street Journal called “The Apple of Gold Stocks”.
- Goldcorp Inc. (NYSE: GG): Goldcorp’s dividend isn’t much to write home about at the moment – unless you consider 0.8 percent yields a meaningful return. But that’s nearly double what it was in March. Goldcorp has offered monthly dividends of $0.034 per share for the last 11 months. Three cents a share is a rather pedestrian offering, but if the share price keeps rising early investors will begin to generate meaningful income. And Goldcorp’s future earnings prospects look bright. The company’s earnings were up 88 percent in the third quarter to 57 cents a share, and its gold production –mostly in Mexico and Guatemala – was up. With plans to open new mines in the Dominican Republic in 2012, Argentina in 2013, and two Canadian production facilities in 2014, Goldcorp’s gold mining presence is expanding. So too is its stock, up more than 17 percent for the year. That all points to higher future dividends for Goldcorp investors.