A long list of companies ranging from cruise ship operators to retailers to airlines to restaurants are on life support. Many others (we’re looking at you, IBM) have spent billions buying back their own stock with borrowed money and now, even if they survive, look ridiculous.
Is there anyone left out there with good year-ahead business prospects? Why yes there is: High-quality gold miners have been accumulating reserves that made sense when gold was considerably lower. Now they’re producing at a profit and have free cash flow to distribute to shareholders. Assuming the gold price stays more-or-less at current levels, these companies will be almost unique in reporting positive year-over-year comparisons in 2020.
For an example of what’s coming, check out what Kirkland Lake Gold just released:
TORONTO, March 18, 2020 (Globe Newwire) — Kirkland Lake Gold today reported on progress with share repurchases through the Company’s normal course issuer bid (“NCIB”) and declared the quarterly dividend for the first quarter of 2020.
Share Repurchase Plan
10.1 million common shares repurchased: A total of 10.1 million common shares have been repurchased through the Company’s current NCIB program. The repurchases have been made through the recently announced automatic purchase program (“ASPP”) and through discretionary purchases directed by the Company under the NCIB. Based on progress to date, the Company’s is well positioned to achieve its goal of repurchasing 20 million common shares over a 12 to 24-month period. A total of approximately $350 million (C$470 million) has been used to repurchase the 10.1 million shares.
Dividend doubled to US$0.125 per share: A quarterly dividend payment of US$0.125 per common share will be paid on April 13, 2020 to shareholders of record as of the close of business on March 31, 2020. The dividend represents a 100% increase from the previous quarterly dividend of US$0.06 per share, which was paid on January 13, 2020 to shareholders of record on December 31, 2019. The payment represents the 12th quarterly dividend payment made to shareholders following the Company’s adoption of a dividend policy in March 2017. The Company’s quarterly dividend qualifies as an “eligible dividend” for Canadian income tax purposes. For Canadian shareholders the US dollar dividend payment will be converted to Canadian dollars using the spot price exchange rate on April 10, 2020, the date prior to the payment date.
Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: “We are very committed to using our substantial financial strength to return capital to shareholders through share repurchases and dividend payments. Although it is a difficult market environment based on current global concerns, we have maintained, and in fact increased, our focus on repurchasing shares through the ASPP and NCIB. When you consider our high-quality assets and industry-leading operating and financial performance, as well as the outlook for a very strong 2020, our current share price represents an excellent buying opportunity. Looking at our dividend, we have now increased the quarterly dividend six times since it was introduced in 2017. Our decision to double the dividend at this time reflects both the strength of our balance sheet and the ability of our three cornerstone assets, Fosterville, Macassa and Detour Lake, to generate significant amounts of free cash flow, particularly in the current strong gold price environment. We will continue our efforts to return capital to shareholders at the same time that we invest aggressively in the substantial growth potential and exploration upside at all three of our cornerstone assets.”
Compare the tone and content of the above with what is and will be coming from most other companies and it’s clear that — assuming you want to be in the stock market at all — the best gold miners are an island of normality in a sea of chaos.
A quick way to gain exposure to this sector is GDX, an ETF that owns most of the big names in the field.