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The Definitive Guide to Gold Dividend Stocks

Top 3 Highest-Yield Gold Dividend Stocks on the Market Today

Written by Luke Burgess
Posted October 22, 2010

It's one of the biggest gripes among anti-gold investors: Gold bullion doesn't pay a dividend, nor does it produce any other kind of income.

However, there are several gold stocks that do pay dividends.

And in just one minute, I'll reveal the top three gold stocks that are currently paying the highest annual dividends. Plus, I'll tell you about the top silver dividend-paying stock.

But first, you need to understand something about gold dividend stocks...

Gold dividend stocks

Gold companies have never thrilled investors with their dividend payments.

And investors looking for regular high-yield annual dividends of +5% aren't going to find them among gold stocks.

In fact the highest dividend yielding gold stock right now only offers a 2.5% annual return. But I've recently found over a dozen energy stocks alone that are paying 8% to 12% annual yields.

Skimpy dividend payments keep gold stocks out of dividend funds. Typically, stocks need a minimum yield of about 2%, and have consistent dividend growth for 5 to 10 years to be considered candidates for the dividend investment category.

Yet, while gold stocks have not historically offered much in the way of dividends, increasing commodity prices are prompting many gold companies to boost yields and even initiate new dividend programs.

Dividends are rising among gold stocks

Back in March, Yamana Gold (NYSE: AUY) began to increase their dividend payment as the rising price of gold drove up revenue.

Since that time, the company has doubled its dividend payments. Take a look:

oct 2010 auy graph

Yamana is currently paying a 0.80% annual dividend yield.

Other gold companies are increasing their dividend payments as well. Recent gold stocks to boost dividend payouts include:

  • Newcrest Mining (ASX: NCM) increased their annual dividend this year by 33% to $0.20 per share after the company saw net profit more than double for the year.

  • Kinross Gold (NYSE: KGC) has kept the company's semi-annual dividend steady for the past 12 months at $0.05 per share. However, it was increased 25% during the third quarter of 2009.

  • AngloGold Ashanti (NYSE: AU) dropped their most recent semi-annual dividend payment slightly from $0.092 to $0.09. However, the company has increased their semi-annual yield by 73% from the spring 2009 payment of just $0.052 per share.

  • Newmont Mining (NYSE: NEM) just raised their quarterly dividend by 50% from $0.10 to $0.15 per share as production revenue rose.

  • Eldorado Gold (NYSE: EGO) announced the inaugural annual dividend payment of $0.05 per share in February.

Even with recent increases, dividend yields among gold stocks are still relatively low.

Most annual dividend yields from the world's largest gold companies are still under 1%. However, there are a few that pay a little more...

The top 3 gold dividend stocks

oct 2010 abx chart
Company: Barrick Gold  Annual Dividend: 1.05%

Barrick Gold (NYSE: ABX) just increased the company's quarterly dividend by 20% to $0.12 per share as profits have been soaring over the past several months for the world's largest gold firm.

If Barrick maintains paying their quarterly dividends at current levels, the company will pay a 1.05% annual dividend in the next 12 months.

oct 2010 gfi graph
Company: Gold Fields  Annual Dividend: 1.25%

Gold Fields (NYSE: GFI) has raised and lowered its dividends based on revenue from the company's major South African gold production and processing operations over the past several years.

The company's policy is to pay around 50% of its cash earnings as dividends, depending upon investment opportunities. The stock is currently paying a 1.25% annual dividend.

oct 2010 hmy chart
Company:
Harmony Gold  Annual Dividend: 2.51%

Harmony Gold (NYSE: HMY), South Africa's gold mining giant, takes top honors as the highest dividend-paying gold stock.

Last fall, the company announced the resumption of their dividend program after a five-year hiatus.

Harmony cited stronger financial health and investor expectations for resuming a dividend payment.

The company currently pays a 2.51% annual dividend — more than double that of its closest competitor.

It seems that gold companies are stingy with the dividends. And it turns out silver companies are worse...

oct 2010 svm chart
Company: Silvercorp  Annual Dividend: 0.90%

The highest-dividend paying silver stock I could find was the Chinese-focused Silvercorp Metals (NYSE: SVM).

In February, Silvercorp initiated a new program and began paying the company's shareholders a 0.90% annual dividend.

Conclusion

Rising gold prices have led to several recent dividend increases among producers.

And with the price of gold expected to continue rapidly rising — with expectations that include $1,650 an ounce from Goldman Sachs — gold companies may continue to increase their dividend payments in the future.

However, as dividend-paying investments alone, gold and silver stocks are not your best bet. As I've just shown you, the highest-yielding gold dividend stock is only paying 2.5% annually.

Of course, gold stocks do offer a more attractive growth forecast as shares rise with skyrocketing commodity prices...

But if you're looking for investments strictly for high-yield dividends, I recommend taking a look into the financial and utility sectors.

Good Investing,

luke_signature.gif

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits

P.S. In a recent post on Energy and Capital's Global Blackout Blog, I give investors a list of 13 high-yield dividend energy stocks. The last time that I put together a list like this, 26 of the 28 energy stocks turned a double- or triple-digit profit... 19 of those energy stocks have returned a +50% gain with six stocks more than doubling in value!

You can check out my new list of high-yield dividend energy stocks right now by clicking here.

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