One of the 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. 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 two companies that will be going ex-dividend on September 4.
Newmont Mining (NEM), which closed trading on Friday at $50.68/share, will be going ex-dividend at the close of trading on Tuesday, September 4. The Greenwood Village, Colorado firm, which currently yields 2.80% ($1.40), engages in the acquisition, exploration, and production of gold and copper properties. The company's assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, New Zealand, and Mexico. As of December 31, 2011, it had proven and probable gold reserves of approximately 98.8 million ounces and an aggregate land position of approximately 31,500 square miles.
When it comes to NEM, there are two catalysts that potential investors should find attractive and they are the company's returns on both assets and equities when compared to industry competitors and the company's profit margins over the last year. In the last 12 months, NEM has demonstrated a return on assets of 8.56% and a return on equity of 4.99%, whereas Kinross Gold Corp. (KGC) has only managed to demonstrate a return on assets of 4.57% and actually failed to demonstrate a positive return on equity. And for the record, the return on equity was actually -16.92%. The second catalyst to consider in terms of NEM, from a comparative point of view, is the company's profit margins over the year. In the last 12 months, NEM has demonstrated a profit margin of 2.25%, which isn't all that great, but when we compare that number to KGC (which only demonstrated a profit margin of -56.71%), we'll notice NEM clearly outpaces some of its competition.
Interpublic Group (IPG), which closed trading on Friday at $10.64/share, will be going ex-dividend at the close of trading on Tuesday, September 4. The New York, New York-based firm, which currently yields 2.30% ($0.24), through its subsidiaries, provides advertising and marketing services worldwide. Its services include consumer advertising, digital marketing, communications planning and media buying, public relations, and specialized communications disciplines. The company also provides various diversified services, such as public relations, meeting and event production, sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting. Its global brands include McCann, Draft FCB, Lowe, and Mediabrands; and agency brands comprise Campbell-Ewald, Hill Holliday, The Martin Agency, and Mullen.
When it comes to IPG, there is one primary catalyst that potential investors should find attractive and that is the company's return on equity when compared to some of its direct industry competitors. In the last 12 months, IPG has demonstrated a return on equity of 20.42%, whereas Publicis Group SA (PUBGY.PK) has only managed to demonstrate a return on equity of 19.18% and WPP plc (WPPGY.PK) only managed a return on equity of 13.76%.
Potential investors looking to establish a position in either NEM or IPG should do so with a moderate position and add to that position as dividend and earnings announcements approach. Although both companies currently have very conservative yields (NEM 2.80% and IPG 2.30%), I'd continue to watch the growth of both companies' profit margins over the next 12 months.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.