Newmont Mining surprises with a dividend cut
Normally, companies go out of their way to avoid sending this kind of negative signal. Here's what happened.
Now that gold is so much lower, the companies face a series of unpalatable alternatives. They can cancel or postpone current spending (and take a beating in the stock market as analysts cut their estimates for future production); or they can raise money in the capital markets -- and so either add debt or dilute current shareholders by selling stock; or they can cut dividends and take cash that would have gone to shareholders and use it to fund capital spending.
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Newmont Mining Corporation has a gold price-linked dividend policy, so as the gold price increases or decreases, so does the amount of the dividend payout.
The reason this quarter's dividend decreased from last quarter is that average London P.M. Fix for the first quarter 2013 was $1,632 per ounce. This compares to an average London P.M. Fix for the fourth quarter 2012 of $1718 per ounce.
Based on Newmont's dividend policy, the dividend payout when the price of gold is between $1,600 and $1,699 is $1.40 annualized, or $0.35 per quarter. When the price of gold is between $1,700 and $1,799, per the policy, the dividend payout is $1.70 annualized, or $0.425 per quarter.
The article failed to mention that per the Company's gold price-linked dividend, in 2012 Newmont returned $1.40 per share in dividends to shareholders compared to a return of $1.00 per share in 2011 -- a 40 percent increase.
More information about Newmont's dividend policy can be found at:
Newmont had an unsustainable dividend policy supported only by a short term rise in the price of gold; caused by over-speculation.
Now they have to cut the dividend because they don't have enough money to pay it. Boy, this stock stuff sure is complicated. Thanks for explaining it to us Jim.
Guess Newmont isn't doing that great, eh..??
Gold isn't doing that great. eh...??
Maybe Newmont should get their shidt together, eh...??
Most gold companies operate on appreciation and production...??
You are either making it or you are not....
Never owned Newmont, never thought they were WORTHY....eh.?
At $1200 gold, the dividend is $0.15 per quarter.
At $1800 gold, the dividend is $0.45 to $0.50 per quarter.
At $2400 gold, the dividend is $0.75 to $1.075 per quarter.
To see the complete dividend schedule, google "Newmont's Dividend Policy".
Right now, Newmont is a bargain. Gold will be bottoming this summer and then start rising again. Newmont's dividends will automatically rise as well.
people are fed up with stocks and no (not low) interest rates. we have been manipulated by the Gov't and we pay while they spend our money.. Now they are trying to exempt themselves from Obama CARE? No answers, just tired of it, I'm going to go on welfare! Screw it!
Who is John Galt or Ann Rand?
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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