If you had the chance to take a dividend in physical bullion rather than cash, would you do it? One company is taking steps to make that happen.
In August, Gold Resource Corp.
This move is the latest in metals companies instituting novel dividend policies. Both Hecla Mining
Investors have been attracted to gold because of uncertainty, countries' actions to devalue their currency in the face of massive deficits and debt levels, and the relative ease of getting gold exposure through exchange-traded funds versus physical gold.
Paying out dividends in metals would have some complications. For one, you would need some sizable holdings to actually receive gold. Gold Resource Corp. said in its press release that metals would only be offered to shareholders who meet a certain minimum position. At yesterday's price, an ounce of gold is worth $1,694 and an ounce of silver is worth $32.515. Assuming recent prices, physical dividends, and an annual dividend, you would need to own the following amounts to get a one-ounce gold or silver coin.
Company |
Price |
Dividend |
Needed for Gold Ounce |
Needed for Silver Ounce |
---|---|---|---|---|
Gold Resource Corp. |
$20.84 |
$0.60 |
$58,838 |
- |
Hecla Mining |
$5.99 |
$0.12 |
$84,558 |
- |
Newmont Mining |
$66.86 |
$1.20 |
$94,406 |
- |
Silver Wheaton |
$32.15 |
$0.12 |
- |
$8,712 |
Silvercorp |
$8.60 |
$0.08 |
- |
$3,500 |
Agnico-Eagle Mines |
$59.27 |
$0.63 |
$159,370 |
- |
Goldcorp |
$48.38 |
$0.41 |
$199,892 |
- |
Sources: Yahoo! Finance and author's calculations.
As you can see, you would need a pretty sizable holding in any of these stocks to get an ounce of gold, though it's much less for silver. However, the chart doesn't recognize that there would also probably be shipping and storing costs, which would eat into your dividend.
With all that said, would you be more interested in investing in a gold stock if it paid out physical dividends?