ETFs Tracking Gold Miners and Paying Dividends


Triston Martin

Oct 24, 2023

The cheap fees and simplicity of trading exchange-traded funds are enough for many investors to entice them (ETFs). Investing in these funds gives investors access to diverse firms, each with a distinct set of characteristics. Asset class, firm size, and industry are common threads that connect these businesses.

Investors can get a taste of gold's price movements without buying gold itself or the shares of a gold company. Only a few of the gold ETFs on the market pay dividends. Only gold ETFs that invest in the shares of firms in the gold sector are eligible for rewards.

Investing in Gold

Diversification is the most typical rationale for which ordinary investors purchase gold ETFs. With a diverse portfolio, one is less likely to be exposed to a particular asset. As a rule of thumb, gold is not correlated with the stock market. The S&P 500 index fell 37%, while gold prices climbed 2% during the 2008 financial crisis.

In addition to diversity, gold is an inflation hedge because of its inclination to rise in value with the general cost of living. Instead of more volatile investments, investors go to gold in times of political or social unrest as a haven. Gold has a long history of serving as a conservative store of wealth and a very effective portfolio diversifier.

The Drawbacks of Purchasing Gold

Gold's long-term value has remained stable, although it has been subject to wild swings in the short term. The value of gold can be challenging to measure, some investors claim. There are no financial measures to examine. Like gold, a non-yielding asset, dividend-seeking investors are put off by gold.

As the stock and cryptocurrency markets boomed in 2021, people traded gold to invest in more risky assets. In 2022, when equities are expected to enter the bear market territory, gold returns have begun to rise as investors resort to the metal for stability. As market circumstances change, investors should be aware of these price fluctuations.

How to Buy ETFs in Gold

Decide whether or not you want to invest in actual gold or gold mining firms before picking an ETF. The risk characteristics of these two asset groups are very different. This is a step-by-step method for developing an investing strategy:

Identify your financial aspirations.

How much money you put into an investment depends on your goals. It is important to note that the investing strategies of those saving for a second house or their children's college education will be very different. As a result, when making decisions, always keep your financial goals in mind.

Look at gold mutual funds.

Consider the fund's performance, expense ratios, top holdings, and assets under management when choosing commodities ETFs. The prospectus of a fund contains this information for potential investors.

Outline asset mix

Make a list of everything you own before investing, and then adjust your portfolio to reflect that. Keep in mind that diversification is the key to success.

Know your assets

Taking control of your money and making required adjustments may be as simple as checking your assets regularly. Make the most of your broker's complementary resources, such as visiting a financial planner, and never be afraid to inquire. Investing can never be completely hands-off.

Dividend-Paying Gold ETFs

Sprott Gold Miners ETF (SGDM)

In 2014, the (SGDM) was first introduced to the market by Sprott. The ETF now owns shares in 33 distinct gold and silver mining firms, each representing a prominent player in the industry.

The fund has a market value of around $269 million. The Solactive Gold Miners Custom Factors Index TR serves as a benchmark for the ETF's performance. A total of 32 distinct precious metals firms make up the benchmark index.

An investment advisor waives 0.02 percent of the fund's operational expenses each year, resulting in a net fund charge of 0.50 percent. It has paid a dividend each year since 2018 and has a yield of 1.22%. 4 On December 22, 2021, the ETF paid out a dividend of $0.36 per share to investors.

VanEck Vectors Gold Miners ETF (GDX)

Gold Miners ETF (GDX), created by Van Eck in 2006, has $14.3 billion in assets and is one of the industry's largest and most commonly traded ETFs. Trades on the New York Stock Exchange (NYSE Arca).

More than a half-dozen major gold producers make up a considerable portion of the ETF's portfolio. To be considered, a company must have a market capitalization of at least $750 million. Newmont and Franco-Nevada are among the company's holdings. The fund's investment objective is to mirror the performance of the NYSE Arca Gold Mines Index.

There is a 0.52 percent cost ratio for the portfolio GDX pays out yearly dividends at 1.15 percent. 56 GDX just paid out a $0.5348 per share on December 27, 2021. Since its launch in 2006, the fund has paid out a dividend every year except for 2008.

iShares MSCI Global Gold Miners ETF (RING)

BlackRock introduced the iShares MSCI Global Gold Miners ETF (RING) in 2012. The MSCI ACWI Select Gold Miners Investable Market Index ETF has $577 million in net assets. Gold mining firms' financial performance is tracked by this index, both in developed and emerging market countries.

Its holdings include 38 different businesses. Agnico Eagle Mines Ltd., Newmont Mining Corp., and Barrick Gold Corp. are the company's top three holdings. In all, they account for around half of the ETF's holdings.

Investors may expect to get an annual dividend of 2.08 percent, with a yearly cost ratio of only 0.39 percent. Distributions are made twice a year. On June 16, 2021, RING declared a $0.31 payout per share before delivering a $0.33 payment per share on December 17, 2021.


Related Stories

Privacy Policy | Terms of Use

© 2024

Contact us at: [email protected]

Testimonials/success stories may be fictionalized / should not be viewed as expected results