Goldcorp Offers Shareholders a Halloween 'Treat'

Includes: ABX, FCX, GFI, GG
by: Old Trader

It's certainly no secret that the precious metal miners don’t loom large (if at all) on the radar screens of income investors. A quick look at some of the more widely held miners (via shows GFI (Goldfields) paying 1.22%, ABX (Barrick) at a 1.00% yield, and FCX (Freeport-McMoRan) topping the charts at 1.27%. Frankly, I would say that FCX probably shouldn't be included in the list by virtue of the fact that it's primarily a copper miner, rather than gold and/or silver.

In fact, a number of months ago, after I wrote an article for SA in which I listed my portfolio holdings and their weights, I received an email from a reader asking how I reconciled my holding in GG with my profile, where I state that my portfolio is structured to generate income/yield, preservation of capital and appreciation of capital, in that order. I responded to the reader that GG fell into the “preservation of capital” bucket.

Over the last few weeks I found myself wondering about GG’s miniscule payout of .015/monthly, effectively .48%. After all, Goldcorp is arguably one of the lowest cost producers among the senior miners, and with the long running climb in the price of gold, one would have to assume that their cash flow must be healthy. According to the latest quarterly statement, GG’s cash costs were $260/0z. on a by-product basis and $429 on a co-product basis. Yes, they’re busy expanding various mines, as well as purchasing smaller producers to acquire additional reserves, but still……

Evidently, management was reading my mind, or something, because on October 27th, when GG announced a doubling in their 3Q earnings compared to a year ago, they also announced a doubling of the dividend paid to .03/monthly, which raises the yield to .81%, based on Friday’s close.

Disclosure: Author is long GG