Yamana Gold Inc. has hiked its dividend to 18 cents per share, boosting the payout by 50 per cent from the current level of 12 cents per share.
From afar, the move seems straightforward because gold prices continue to soar. But a quick peek at the company's stock chart conjures up some other theories. Chiefly, Yamana's shares have been slumping, which is now common for large miners even though mineral prices are still hot, and the company may feel the need to give investors a reason to look at its stock again.
That idea was brought up by Agnico-Eagle Mines chief executive officer Sean Boyd a few weeks back. In an interview with Mining Weekly, suggested that gold miners probably need to revisit their dividends and added that "I think what they have to do is be fairly clear on what they are going to do to reward shareholders." Agnico-Eagle's stock has also slumped, down 21 per cent year to date.
Since the start of 2010 Yamana has more than quadrupled its quarterly dividend from 1 cent, which is hardly anything, to 4.5 cents. There was no mention of the weak stock price in Yamana's announcement, and chief executive officer Peter Marrone simply said the hike was a result of the company's strong earnings and fundamentals.
Yamana has also hiked its exploration budget from $85-million to $105-million.