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Newmont sweetens its gold-linked dividend

Newmont Mining Corp. is adding a sweetener to its gold-linked dividend policy as the price of gold starts to cool off from its rocket propelled trajectory.

For some history, Newmont announced the gold-linked dividend back in April, making it the first gold miner to tie its shareholder payout directly to its average realized price of gold sales for the quarter. For each $100 per ounce increase in the price of gold, the company's dividend would rise by 20 cents per share. At the time, gold was just north of $1,400 per ounce. Now it's around $1,800.

While that rise should be intriguing enough for investors, given the policy, Newmont is giving its dividend even more juice. Going forward, the payout will stay tied to the price of gold, but the company will also add 7.5 cents per share when the realized gold price in a quarter is higher than $1,700 per ounce. And if the realized gold price tops $2,000, the sweetener will be an extra 2.5 cents, which totals 10 extra cents.

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While that sounds very intriguing, keep in mind that the company's dividend is only 1.2 per cent. Also, although the dividend will increase if gold goes up, it will also fall if gold drops. Now that gold is sitting in its holding pattern, it looks like the price could go either way.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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