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Gold barsIan Barrett

Gold companies have seldom delivered much pizzazz for investors in the dividend department, but it looks like that is starting to change.

Buoyed by high prices for the yellow metal, Barrick , the world's No. 1 miner of the precious metal, announced on Thursday that it is raising its dividend by 20 per cent to 12 cents (U.S.) quarterly. Just a day earlier, rival gold giant Newmont Mining Corp. did the same thing, raising its payout a whopping 50 per cent to 15 cents a quarter.

Kinross Gold Corp., another major producer, will be reporting earnings next week, and with two of its competitors sending fatter cheques to shareholders, it too will be in the spotlight over its payout intentions.

The focus on dividends is a big change for gold stocks, which previously would never have been mistaken as being in same staid class of regular payers like banks and utilities.

Investors traditionally have bought shares of major producers for only one reason: as a leveraged way to profit from a rise in the price of bullion through capital gains. Bullion itself doesn't yield anything, one of the reasons there was never much consideration about earning a dividend from stocks that mine it.

"Everybody says gold pays no yield. Gold miners can," said John Ing, who follows the industry at Maison Placements Canada Inc. and applauds the dividend increases.

The leverage play has not worked out so well over the past few years, and with gold at lofty levels, companies have few other options than dividends as a way to reward shareholders. They're more than able to do so because they're coining money at these bullion prices.

Any gold price "over $1,100 (U.S. an ounce) they're very happy campers, no doubt about that," Jon Nadler, a senior analyst at Montreal-based precious metals dealer Kitco., said of gold mining companies.

To be sure, the yields on gold shares are still relatively thin, even with the recent increases. No one would mistake them for stereotypical dividend payment investments, like banks or utilities, which typically yield 3 per cent to 5 per cent.

With its latest increase and at current share prices, Newmont has 1.1-per-cent yield and Barrick 1.2 per cent. Kinross is at just 0.6 per cent while Goldcorp Inc.has even less, 0.5 per cent. Agnico-Eagle Mines Ltd. has an almost invisible 0.3-per-cent yield The skimpy payouts are one of the reasons gold stocks typically don't get placed in most dividend funds.

The Claymore S&P/TSX Canadian dividend ETF doesn't hold any gold stocks because none of them meet the tough entrance threshold required to be included in the fund: five years of rising dividends.

"Just because a stock pays a dividend doesn't necessarily mean it's worthy of getting into a dividend fund," said David Taylor, who manages the Dynamic Canadian Dividend Fund.

He said stocks need a minimum yield of about 2 per cent to be considered candidates for the dividend investment category and "anything less than that it's almost not even" worth the effort. He called the yields on some of the gold stocks so low they're "a joke."

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Mr. Taylor has previously bought gold names for his funds, but not for the prospect of dividends. He thought the shares were undervalued, relative to those of other commodity producers.

Mr. Ing, the gold analyst, said bullion producers are going in the right direction, reversing their "shabby treatment towards the dividend." He thinks the trend to bigger payouts has further to go and may eventually bring yields to 3 per cent.

"Shareholders should be rewarded and in fact should be rewarded more," Mr. Ing said.