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
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
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
Over in the particularly turbulent world of silver, Silver Wheaton
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.
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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.