One of the most important variables many income driven investors consider when developing a dividend based strategy is the trading of shares at or near a company's ex-dividend date. According to Investopedia, "on the ex-dividend date the person who owns the security will be awarded the payment, regardless of who currently holds the stock". After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend. That said, there are three companies that will be going ex-dividend on August 29th that dividends investors should consider.
Barrick Gold (ABX) which opened trading on Tuesday at $37.66/share will be going ex-dividend at the close of trading on Wednesday, August 29th. The Toronto, Ontario-based firm, which currently yields 2.10% ($0.80), engages in the production and sale of gold and copper. The company has a portfolio of 26 operating mines, and exploration and development projects located in North America, South America, the Australia Pacific region, and Africa. It also holds interests in oil and gas properties located in Canada.
I think that one of the key long-term catalysts for ABX is going to be margins, and how they outpace some of ABX's competition within the gold sector. Over the last 12 months, ABX has demonstrated a profit margin of 27.85% and an operating margin of 42.04%, whereas AngloGold Ashanti Ltd. (AU) only managed to demonstrate a profit margin of 24.58% and an operating margin of 31.97%. It should be noted that AU will also be going ex-dividend on August 29th, although I think ABX is a much better gold play at current levels.
Compass Minerals (CMP) which opened trading on Tuesday at $71.55/share will be going ex-dividend at the close of trading on Wednesday, August 29th. The Overland Park, Kansas-based firm, which currently yields 2.70% ($1.98), through its subsidiaries, produces and markets inorganic mineral products primarily in North America and the United Kingdom. The company operates in two segments, Salt and Specialty Fertilizer.
I think that one of the key long-term catalysts for CMP is going to be continuation of solid EPS results, and how they outpace some of the competition within the metals and minerals sector. Over the last 12 months, CMP has surpassed analysts' estimates by an average of 28.20% in three of the last four quarters, with the only anomaly coming during the March 2012 quarter when the company missed estimates by 2.60%. If we compare CMP's earnings to that of industry competitor Potash (POT), we'll see that POT has failed to surpass earnings in each of the last four quarters by an average miss of 6.15%.
Potential investors looking to establish a position in either ABX or CMP should do so with a moderate position and add to that position as dividend and earnings announcements approach. Although both companies currently have very moderate yields (ABX 2.10% and CMP 2.70%), the biggest secondary variable to consider will be the spot prices of the respective commodities each of these companies focus on.
Disclosure: I am long ABX.