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Newmont Raises Dividend 38% as Gold Prices Weaken in 2021

Newmont Corporation (NEM) is a gold producer with significant operations and assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. As of December 31, 2020, the company had proven and probable gold reserves of 94.2 million ounces and a 22,700 square mile land position.

The company generated about 90% of its revenue from gold with the remainder coming from silver, zinc, copper, and lead during the fourth quarter of 2020. In geographic terms, the company generated 44% of its income from Australia, 20% from the United States, 17% from Mexico, and 17% from Ghana with the remainder coming from other countries.

Gold Prices Move Sharply Lower

Gold prices have fallen significantly lower over the past few months as government bond yields continue to rise. With a $1.9 trillion stimulus bill on the horizon, bond yields have been on the rise as investors foresee greater inflation ahead. These rising bond yields could prove challenging for gold prices if they continue on their current trajectory.

Newmont reported fourth quarter revenue that rose 14% to $3.38 billion and adjusted profit that rose to $856 million, or $1.06 per share. While production fell due to the sale of Red Lake and Kalgoorlie, among other factors, average realized gold prices surged during the quarter to $1,852 per ounce—a trend that might not continue into 2021.

The company raised its quarterly dividend by 37.5% to $0.55 per share, which represents a 3.85% forward yield. The dividend is payable on March 18, 2021 to shareholders on record as of March 4, 2021.

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