Two Gold Miners and One Silver Miner for Dividend Investors

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Last year was not a good one for precious metals miners. Not only did their share prices fall but several of them cut their dividends. Here are just a few examples, but keep in mind that this is hardly a complete list:

  • Barrick Gold (NYSE:ABX) cut its dividend from 80 cents per share to 20 per share.
  • Newmont Mining (NYSE:NEM), which pays a dividend based on the gold price, paid a 42 per share dividend in March. This fell to 20 cents in December.
  • Agnico Eagle cut its dividend from an annualized rate of 88 cents per share to 32 per share.
  • Gold Resource Corp. (NYSEMKT:GORO), which made a name for itself in the sector by offering a large monthly dividend, cut its payout from an annualized rate of 72 cents per share to 12 cents per share.
  • Silver Wheaton (NYSE:SLW), which like Newmont pays a dividend based on its cash flow, which is based on the prices of silver and gold, paid a 14 cents per share dividend in March and a 9 cents per share dividend in December.
  • Kinross Gold (NYSE:KGC) paid a dividend of 8 cents per share on a semiannual basis starting the year and it ended the year with no dividend.

The list can go on, but the point is made. Now, a dividend cut isn’t necessarily a bad thing. In fact, in the cases of Newmont and Silver Wheaton investors were told that the dividend was not a fixed amount. Rather it would be determined by the gold price in the case of Newmont, or by cash flow in the case of Silver Wheaton. Dividend reductions were to be expected. Further, in the other cases we find that these companies got overextended, and the dividend cuts were a part of a broader cost-cutting agenda.

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