Investors have another reason to flock to fledgling gold miner Beadell Resources (BDR) as expectations mount that it will start pumping out dividends next year.
Macquarie Private Wealth anticipates Beadell – which jumped 6% yesterday after turning a maiden profit for the first half of the year – will return shareholders up to $100 million in dividends in the next 18 months.
Beadell's high-grade Duckhead deposit in Brazil is expected by the broker to produce 330,000 ounces of gold and $240 million in cash over the next year and a half, with only $140 million used to repay debt. Since there aren't any other significant uses for the excess cash, the broker forecasts a payout ratio of 60%.
This translates to a yield of 3.4% in 2014, growing to 5.7% by 2016 – a stand out for the gold mining sector.
Eureka Report flagged Beadell's dividend potential and possible re-rating when it reaches that milestone two weeks ago.
Macquarie reiterated its "outperform" rating on the stock even though Beadell has run up close to its 90 cents price target. The stock is trading flat at 88.5 cents at 1405 AEST.
Beadell is part of the Uncapped 100.