Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Yamana Gold Just Became 50% More Interesting For Dividend Investors

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Sometimes a shift in perspective is all that's needed to appreciate the sheer beauty of a prospective investment. Taking a fresh approach to assess the compelling opportunity that I believe resides in shares of Yamana Gold (NYSE: AUY  ) , let's talk percentages.

Income investors rejoice: The dividends I indicated would emerge from these miners of gold have materialized in short order, and Yamana revved-up the party this week with a bold 50% increase of its quarterly dividend (to reach an annualized yield of 1.5%). When 50% of sales revenue is converted to operating profit, as was the case for Yamana in the first quarter, returning some cash to shareholder seems a wholly reasonable response.

A 1.5% yield may not sound like much of a windfall just yet, but it is 83% better than that of larger rival Goldcorp (NYSE: GG  ) , and I believe Goldcorp will now feel at least 20% more compelled to re-raise its own payout. After all, Newmont Mining (NYSE: NEM  ) recently upped its dividend by 33% to yield 1.5%, and Newmont boasts nowhere near the sort of production growth profile that makes Goldcorp such a prominent force in the industry.

Offering further enticement, Newmont has adopted an innovative dividend strategy that will see its quarterly payout raised $0.05 per share for every $100 increase in its realized sales price for gold. While Newmont may be the first to spell it out in an explicit formula, I feel 60% certain that 75% of gold mining executives have contemplated similar dividend increases to correspond with the rising price of gold. Agnico-Eagle Mines (NYSE: AEM  ) still offers just a 1% yield, but the company has repeatedly stated its commitment to enhancing shareholder returns through dividend increases. Eldorado Gold (NYSE: EGO  ) recently set an inaugural dividend for a preliminary yield of 0.6%. Clearly, miners view growth and income as compatible targets in this gold price environment, since each of the aforementioned miners -- with the exception of Newmont -- expects production growth of 50% or more by 2015. I wonder whether that particular tidbit raised an eyebrow over 50% of the eyes perusing this article.

Over in the particularly turbulent world of silver, Silver Wheaton (NYSE: SLW  ) has initiated a token quarterly dividend of $0.03 per share, but former CEO Peter Barnes left investors with something tasty to nibble on when he revealed in March: "I don't see any reason why in the future we couldn't be paying out 40, 50 or 60 percent of our cash flow every year in dividends."

But wait; there is 25% more to this story. You see, after a tremendously successful year of exploration in 2010 -- which yielded a 23% expansion of the company's gold reserves (net of production) before the strategic sale of Agua Rica-- Yamana has decided to hike its 2011 exploration budget by 25% to reach an impressive $105 million campaign. I personally ascribe a 100% likelihood of additional exploration success for Yamana, and I look to that same organic growth potential as a likely catalyst to lessen the stock's 60% discount to my fair value estimate of $30 per share.

Consider the three stocks above along with the 13 names in a free report from The Motley Fool's expert analysts, "13 High-Yielding Stocks to Buy Today." A senior analyst dubbed one of the picks as "the dividend play of a lifetime." Hundreds of thousands have requested access to this report, and today I invite you to download it at no cost to you. To get instant access to the names of these 13 high-yielders, simply click here -- it's free.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines, Eldorado Gold, Goldcorp, Silver Wheaton, and Yamana Gold. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a gilded disclosure policy.

Read/Post Comments (1) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 12, 2011, at 7:08 AM, JD1459 wrote:

    NSU, who just reported earnings of 6 cent a share from 1 month of operations, is expected to start a dividend program some time this year.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1493303, ~/Articles/ArticleHandler.aspx, 9/24/2016 5:05:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 19 hours ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:02 PM
AUY $4.49 Down -0.20 -4.26%
Yamana Gold CAPS Rating: ***
AEM $54.33 Down -2.22 -3.93%
Agnico-Eagle Mines CAPS Rating: **
EGO $4.13 Down -0.12 -2.82%
Eldorado Gold CAPS Rating: **
GG $16.66 Down -0.43 -2.52%
Goldcorp CAPS Rating: ***
NEM $39.56 Down -1.21 -2.97%
Newmont Mining CAPS Rating: ***
SLW $27.82 Down -0.87 -3.03%
Silver Wheaton CAPS Rating: ****