Stock Quotes in this Article: ASA, FCX, NEM

The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.

SAN FRANCISCO (Stockerblog) -- Here is an interesting inflation hedge for income investors: Newmont Mining (NEM) is planning its dividend payments based on the average sales price for gold. The expected payment date based on this formula is June 29, 2011.


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    According to the company:

    "The annual payout will increase at a rate of $0.20 per share for each $100 per ounce rise in the average realized gold price. At the current gold price of approximately $1,450 per ounce (i.e. between $1,400 - $1,499 per ounce), Newmont's annual dividend would be $1.00 per share. Subject to Board approval, the first quarterly dividend under this policy is expected to be payable on June 29, 2011 to shareholders of record on June 16, 2011."

    The company believes that by 2017, it can produce 7 million ounces of attributable annual gold production, and that based on today's prices of precious metals, it can achieve internal rates of return in excess of 20%. At the end of last year, the company has $5 billion in cash and marketable securities. This was prior to the purchase of Fronteer for $2 billion. The stock trades at 12.75 times forward earnings and is currently generating a yield of 1.0%.

    Newmont isn't the only gold mining company that generates a yield. There are plenty of others, according to our list of gold mining dividend stocks at, with yields as high as 6%.

    One example is Freeport-McMoRan Copper & Gold (FCX), which yields 1.7%, payable quarterly. The company, which mines for copper, gold, molybdenum, silver and cobalt, trades at 9 times forward earnings.

    Another is ASA Limited (ASA), which is an investment trust that invests in stocks of companies engaged in the exploration, mining or processing of gold, silver, platinum, and diamonds. It sports a price-to-earnings ratio of 7 and a yield of 2.0%.

    For a list of all the dividend-paying gold mining companies, which can be downloaded, sorted and updated, go to

    At the time of writing, author had no positions in stocks mentioned.

    Fred Fuld III, the publisher of stock and bond investing blog Stockerblog and founder of WallStreetNewsNetwork, has been in the financial services industry for over 20 years, working as an investment advisor, options market maker at the Pacific Stock Exchange, vice president of a San Francisco money management firm, university faculty member and wholesaler for the New Alternatives Fund (the first environmentally conscious mutual fund). He is the author of the books Investing in Brazil Stocks and The Green Light on Green Stocks.