Investors can expect a dividend increase of approximately 20% when Barrick Gold Corp. reports third quarter results before markets open on Thursday, October 27.
That’s the forecast from Stephen D. Walker, analyst at RBC Capital Markets, who noted that Barrick last hiked its dividend in July 2010. He also pointed out that the company’s payout ratio is 10% of 2011 estimated earnings, compared to North American Tier 1 gold peers at 16%.
Mr. Walker is forecasting free cash flow of US$4.5-billion for Barrick in 2012, while the current 48¢ annual dividend adds up to US$480-million.
The analyst told clients that Barrick is trading at a base metals multiple of 0.86x net asset value, 5.8x 2012 estimated cash flow per share and 7.2x 2012 earnings per share. That is a discount to its peers trading at 0.99x, 7.8x and 10.6x, respectively, but in line with copper producers.
Barrick has gold production on four continents and copper production from its Zaldivar mine in Chile and Lumwana mine in Zambia provides a meaningful second cash flow source.
RBC expects copper will make up 15% of revenues in 2011.