Apparently, this pathway doesn't lead to dividend bliss. Photo Credit: Gold Footpath by George Hodan
The aftermath of gold's bloodbath last quarter continues. After falling a record 23%, gold isn't done ruining investor returns just yet. After it absolutely crushed the stock prices of many gold mining stocks last quarter, gold has set its sight on crushing the last remaining glimmer of hope for investors: dividends.
In addition to reporting multi-billion-dollar quarterly losses, gold miners Barrick Gold (ABX +3.48%) and Kinross Gold (KGC +4.92%) had one parting shot for investors. Both companies also announced dividend cuts, with Barrick slashing its dividend by 75% and Kinross completely eliminating its payout. Talk about adding insult to injury.
To say it was a rough quarter for the pair would be an understatement. Barrick's stock is down 43% since the start of the second quarter. Gold's collapse caused the company to take $8.7 billion of impairment charges for the quarter, which led to a reported loss of $8.56 billion on the quarter, or $8.55 per share. Also, its once steadily growing dividend of $0.20 per share was cut back to $0.05 per share, a level not seen in more than a decade.
It was the same bleak story at Kinross Gold. While its stock performed slightly better than Barrick's, investors still have endured losses totaling 35% over the same time frame. It too took a multi-billion-dollar impairment charge, which totaled $2.29 billion, leading to per-share losses of $2.17. Unfortunately, the collapse of gold was more than its dividend could handle and the company halted the payout until market conditions improve.
The good news is that not all gold dividends were crushed in the quarter; Yamana Gold (AUY +0.00%) just declared its third-quarter payout. While the company's cash flow in the quarter dropped to $150.9 million ($0.20 per share) from last quarter's $214 million ($0.29 per share), it more than enough to cover its $0.065 per share dividend. In other good news, unlike the aforementioned peers, Yamana did not take any impairment charges in the quarter.
Another still golden dividend is Goldcorp's (GG +0.00%) monthly payout. While the company's quarter was tarnished by the drop in gold, its dividend is still on solid ground. Like Yamana, it produced more than enough cash flow to cover its payout, as the company delivered $388 million in adjusted cash flow while its dividend payments only required $121 million. The company has chosen to defer capital expenditures and cut expenses rather than cut its dividend at the time its investors need it the most.
It was a pretty terrible quarter for gold investors. The precious metal took a record plunge, which took gold mining stocks down with it. In some cases that plunge also cost investors their precious dividend payments as well. That being said, now that all the bad news is out, it might actually be time to start digging into the gold miners in hopes of finding one that will deliver golden returns.
