TORONTO (miningweekly.com) – Keeping with the latest fad among North American precious metals producers, Silver Wheaton announced on Wednesday it would also be linking its dividend to metal prices, though indirectly so.
The company said it would pay a dividend equal to one-fifth of operating cash flows in the previous quarter, with than number being directly affected by the silver price, as the streaming firm’s costs are essentially fixed at around $4/oz.
Silver Wheaton buys future silver production from companies at a set price, and then sells it at spot once the operations come into production.
Under the new policy, the Vancouver-based firm will pay a $0.09-a-share dividend for the fourth quarter.
“Our new policy allows us to return a meaningful portion of our cash flows to our shareholders, with the current quarterly dividend tripling from previous levels,” CEO Randy Smallwood said in a statement.
The move follows Newmont Mining’s announcement at the start of the year that it would peg its dividend payments directly to the gold price, and silver miner Hecla announced at the September Denver Gold forum that it too would link payouts to the silver price.
Bloomberg quoted US silver producer Coeur d’Alenes CEO Mitchell Krebs as saying his firm would consider linking dividend payouts to the metal price.
Precious metals producers have been under pressure from investors to boost their dividend yields as prices soar.
Gold, which has risen every year for the past decade, topped $1 920/oz in September, while silver approached $50/oz earlier in the year.
Speaking on a conference call, Smallwood said the cash flow-linked dividend would provide investors with greater exposure to Silver Wheaton's production growth – forecast to rise more than 65% over next four years.
It would also further differentiate the company from silver exchange-traded funds, which pay no dividends, he said.