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Newmont Mining Corp
Freeport-McMoRan Copper & Gold Inc
Evy Hambro, portfolio manager of BlackRock Inc. (BLK)’s $11 billion World Mining Fund (MIGWMFA), said his campaign to get gold mining companies to raise their dividends is starting to reap rewards.
“I’ve been on a bit of a crusade for dividends now for many years,” Hambro said in an interview in London today. “Probably the most guilty parties here are the gold producers who have just been so reluctant to share the higher margins that they are enjoying today with the owners of their businesses.”
The 16 members of the benchmark Arca Gold BUGS Index, including Newmont Mining Corp. (NEM) and Kinross Gold Corp. (K), will pay an average dividend yield of 1.6 percent this year. That compares with an average dividend yield of 4.5 percent in the STOXX Europe 600 index and 2.7 percent in the 140 member Bloomberg World Mining Index. The price of gold has risen for 11 consecutive years and almost doubled since 2008.
“The very, very low yields that we see on the gold sector I think are one of the contributing factors that has led to gold shares significantly under-performing the price of gold,” Hambro said in an interview with Francine Lacqua on Bloomberg Television’s ‘On the Move.’
“We think it’s going to change because the gold companies are all now raising their dividends and are trying to catch up with some of their mining sisters but it’s a hell of a long way to go,” Hambro said.
Kinross, which has raised its last two semi-annual dividends, may increase payments by a further 25 percent next year to 10 cents from 8 cents, according to data compiled by Bloomberg. Other members of the Arca Gold BUGS Index that may boost their dividends include Randgold Resources (RRS), Harmony Gold Mining, and AngloGold Ashanti, the data show.
Barrick Gold Corp. (ABX), the world’s largest producer of the metal, increased its dividend to 20 cents a share from 15 cents in the first quarter, it said May 2. Newmont said April 24 it increased its quarterly dividend 75 percent from the same period a year earlier.
Gold futures may climb on speculation that the Federal Reserve will take more steps to boost economic growth and as a weaker dollar increased the appeal of the precious metal as an alternative investment. Bullion for immediate delivery fell 0.3 percent to $1,623.45 an ounce by 2:59 p.m. in London.
BlackRock’s World Mining Fund counts bullion producers Freeport-McMoran Copper & Gold Inc. (FCX) and Newcrest Mining Ltd. (NCM) among its top-ten holdings. Hambro also manages BlackRock’s $2 billion World Mining Trust Plc.
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