Gold miners bump up their dividends – by Brenda Bouw (Globe and Mail – October 23, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER – Gold miners are sweetening their shareholder payouts in an attempt to lure investors as they dive back into the precious metal.

Barrick Gold Corp. and Newmont Mining Corp. two of the world’s top producers, announced increases to their dividends on Wednesday, while Goldcorp Inc. hinted a hike is in the works.

Gold companies traditionally have paid low dividends, but they’re stepping up payouts as they compete for investors in the precious metals industry.

More investors are turning to gold as a haven amid turmoil in global financial markets, which stems from worries about a replay of the last global recession.

What’s worrying for producers is that more investors are bypassing them for such gold-backed investments as exchange-traded funds. Some investors believe producers carry more risks, ranging from rising costs, to production and geopolitical issues, that could weigh on returns.

That puts more pressure on gold miners to improve their payouts, while at the same time trying to control costs and expand operations to fulfill growth expectations.

The pressure to pay dividends also increases for miners who make more profit when gold prices climb, as they have in recent days after falling by almost 20 per cent from a record of $1,923.70 (U.S.) an ounce in early September.

On Wednesday, gold futures hit a one-month high of $1,728, as fears mount that Europe’s debt crisis will not be easily resolved.

Barrick lifted its dividend by 25 per cent to 15 cents (U.S.) per share, which the company said is due to strong earnings and a positive outlook for the price of its key product. Barrick is expected to release its quarterly financial results before the market opens on Thursday.

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