Dividend-paying Gold Mining Stocks

What is a dividend-paying stock?

Dividend paying stocks are a mechanism through which a business periodically distributes some of its revenue to shareholders. Dividends may take several forms, including additional shares, discounts on share purchases and direct cash payments. In the case of the latter, the money is typically sent to a shareholder's brokerage account.

Some companies may also offer a dividend reinvestment program, allowing shareholders to automatically buy new shares with their dividends — typically either commission-free or at a reduced cost. Whether or not an investor qualifies for a payout is generally tied to something known as the ex-dividend date. Dividend payouts for each stock go to whoever owned the stock on that date, even if they sell the stock off immediately afterwards.

Why dividend-paying stocks are a good investment

Aside from receiving a consistent income from their investment as the market rises and falls, companies that practice revenue sharing through dividend-paying stocks tend to be quite well managed. These companies generally remain stable even in the face of a volatile market. This is particularly beneficial in the case of resources with a fluctuating price, such as gold.

Whether or not one invests in a dividend paying mining stock generally comes down to risk tolerance. It's a choice between a riskier investment with a potentially high return or a safer investment with a return that may be somewhat lower.

Savvy investors, however, don’t make the mistake of assuming that because dividend-paying stocks are less risky, they are entirely without risk. It is still entirely possible to lose money investing in a company that pays shareholder dividends if you fail to perform due diligence.

Which gold-mining companies paid dividends in 2021?

Many of the major players in the gold-mining industry offer dividends on their stocks, including Barrick Gold (TSX:ABX,NYSE:GOLD), Gold Resource (NYSEAMERICAN:GORO) and Newmont (TSX:NGT,NYSE:NEM).

However, there are also many promising junior gold companies with incredibly generous dividend payouts. For instance, GCM Mining (TSX:GCM,OTCQX:TPRFF) offers one of the highest yields in the sector, while also being the only non-royalty-based producer to provide shareholders with a monthly dividend. Last year, it paid out a total of C$11.5 million. The average dividend yield for GCM is approximately 3.5 percent.

Hecla Mining Company (NYSE:HL) is another highly promising stock. In addition to being a significant producer of gold, the Idaho-based mining company is a major producer of silver, with its Green creek mine producing 40.7 million ounces in 2020. The average dividend yield for Hecla is 0.46 percent.

Finally, African gold-mining company DRDGOLD (NASDAQ:DRD) has an annual dividend yield of 5 percent. The company recently experienced a minor 3 percent quarter-on-quarter downturn in production, but management has asserted that it's favourably positioned to declare a final cash dividend around August 2022.