Newmont Mining Raises Dividend 75 Percent

Proof that gold miners are really profitable even with gold at current "low" levels! 
----


"Newmont Mining (NYSE: NEM, Stock Forum), after Tuesday's close, announced that its Board of Directors declared a quarterly dividend of 35 cents per share of common stock, payable on June 28, 2012, to holders of record at the close of business on June 12, 2012.

"The 75% increase in our dividend compared to the second quarter of 2011 demonstrates our commitment to returning capital to shareholders," said Richard O'Brien, Newmont's President and CEO. "Our shareholders continue to benefit from our preeminent gold price-linked dividend policy."

The second quarter 2012 dividend of 35 cents per share was declared in consideration of Newmont's first quarter 2012 average realized gold price of $1,684 an ounce. Under the miner's gold price-linked dividend guideline, each quarterly dividend will be based on Newmont's average realized gold price for the preceding quarter.

At its current share price of $46.37, Newmont's quarterly dividend payout rate would give its stock a yield of about 3% on an annualized basis, presuming the gold price remained at $1,684 throughout the year. At a $2000 gold price, the yield would jump to nearly 6% if the stock stayed in the $46 range.
Despite its dividend increase, shares of Newmont Mining have dropped 18% during the past 52 weeks. The company plans to release its first quarter 2012 results before the market opens on Friday, April 27, 2012." From Stockhouse.com

Gold Juniors Will Outperform the Next Leg

 Something amazing has happened from October of 2011 until present day - The Dow has actually been outperforming gold (the HUI, the GDX and the GDXJ, as pictured below). Do not expert this divergence to last long. As you see, the juniors (GDXJ) outperformed all from 2010 to 2011, hitting $44 at one point.

The Dow and the S&P (GSPC) started the divergence early December of 2011. It is in my strong opinion that the GDX and GDXJ are in very oversold territory - both are trading near 52 week lows. And it is in my opinion that the Dow is very overbought!

In the long run, it is not even close...gold has been king.

I also believe that, whether it's in 2 months, 6 months, a year, that gold stocks will start outperforming physical, especially the juniors.

From 2005 to 2008, the GLD and HUI traded virtually side by side...the crash of 2008 changed that and GLD has outperformed since then....

I do expect them to meet again, I just do not know when. I will say this - the miners pay dividends and will most certainly be increasing them in the coming years. The miners are all pretty undervalued at the moment as well. Maybe its when people finally realize this, will the gap start to close. Or maybe when they realize the GLD doesn't really have any gold! I do believe the investment mentality on gold stocks will change, it is only a matter of time. Just keep buying at these insane valuations and buy the dips!

I am long GDX and GDXJ. 

Charts courtesy of Yahoo! Finance

Insider Buy Alert - Brigus Gold

Courtesy of CanadianInsider.com:

I am long BRD.