Freeport-McMoRan Copper & Gold (NYSE:FCX) said it would more than double its annual dividend from $0.36 a share to $0.80. The quarterly $0.20 payment will begin in Feb. 2004, bumping the company's dividend yield from 0.97% at yesterday's $37.14 close to 2.15%.

Many precious metals companies find themselves with increased cash due to rising prices. (Matt Richey explains.) Companies can deploy this cash river in many ways. To benefit shareholders, management may invest the cash for a greater return, pay dividends (which, if taxable, are taxed in the U.S. now at 15%), and buy back stock to increase the relative ownership share of the remaining shares. They may also pay down debt. None is better than any other; it all depends on the accuracy of management's judgment that the capital provides its greatest return if deployed here rather than there.

If you think that gold will continue to appreciate or if you want an inflation hedge, you may consider New Orleans, La.-based Freeport-McMoRan and the handful of precious metals companies returning cash to investors at over 2% yield:

  
                        Total  Total   Div.Company               Cash*  Debt*   Yield
    Anglo American
    
       (NASDAQ:AAUK)   $1196  $4528   2.81%AngloGold  (NYSE:AU)    340    919   2.70%Freeport  (NYSE:FCX)    801   2573   2.15%Harmony  (NYSE:HMY)     N/A      0   2.79%Rio Tinto  (NYSE:RTP)   615   6191   2.43%
*All $ in millions.

But be careful. Gold and other precious metals companies come with risk, especially when their assets -- like Freeport-McMoRan's in Indonesia -- are located in countries with volatile governments. Three trade in the U.S. as ADRs, and the corporate headquarters of all but Freeport are based in foreign countries. Those four do not file 10-Q and 10-K reports, so you need to be comfortable digging for financial information and with accounting rules in the companies' home countries. (For help, consult our international investing resources.)

Verdict? Handle with care, and for experienced gold diggers only. To learn more, enjoy our Mining & Metals discussion board.

For help in finding high yields, join Mathew Emmert each month as he uncovers them in Motley Fool Income Investor. Get your free trial today!