GOLD Fields has delivered on its updated dividend policy announced last year declaring a final dividend of R18.5 a share – 164% higher than the previous year’s final – while the group also declared a special dividend of R4.5 per share.
Combined with the interim dividend of R7 a share the total regular dividend of R25,5 equates to 35% of free cash flow before discretionary investments which is in line with the group’s new stated policy of paying out 35% of free cash flow.
The dividend was driven by a combination of the soaring gold price plus a strong performance from the group’s new Salares Norte mine in Chile and there’s more to come, according to Noah Resources analyst René Hochreiter.
In a flash research note, Hochreiter commented: “Even though capital expenditure is guided up in financial year 2026 the gold price is high enough to allow special dividends again to be paid.
“The dividend yield is around 3.6% at current share prices. This is still not high enough – in our view – in this roaring bull market for gold.
“A dividend yield of greater than 5% would be more normal in this type of market which is closer to R40 at current spot prices.”
Analysts have before been critical of Gold Fields’s capital allocation plans shortly after presenting them in November. UBS and RMB Morgan Stanley both questioned the extent of capital investment Gold Fields’s was making chasing production instead of passing the cash through to investors.
Mike Fraser, Gold Fields CEO, responded at that time: “My takeaway after that day, and after some feedback about discretionary investment, is that the market is very short term-focused at the moment.
“I’m saying to the shareholders that as long as we’re competing in the top quartile against our peer group on shareholder returns and a dividend yield basis, you should be happy. Why do you want more than that return from us?
“Without investing, you’re not going to get the capital return through the share price.”
