Kinross Reinstates Dividend, Plans To Boost Output; BMO Upgrades To Buy

Kinross Gold will reinstate dividend payments after seven years, aided by its “strong free cash flow” and balance sheet. The Canadian miner also plans to boost production by 20% to 2.9 million gold equivalent ounces by 2023. Shares are up 2.2% in pre-market trading on Friday.

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Kinross Gold’s (KGC) board approved a quarterly dividend of $0.03 per share, which will be payable on Oct. 22 to shareholders of record on Oct. 8. The quarterly dividend of $0.03 per share would amount to an annualized dividend of $0.12 per share and represents an annual yield of approximately 1.3%.

The company’s CEO J. Paul Rollinson said “With our investment grade balance sheet, strong free cash flow, significant margins and substantial cash position, we are pleased to return capital to our shareholders in the form of a dividend.”

In addition, Kinress seeks to focus on lowering its production cost of sales and capital expenditures to drive strong free cash flow. The company will also continue to use $1,200 an ounce as a gold-price assumption for its mine plans. (See KGC stock analysis on TipRanks).

Following the news, BMO Capital analyst upgraded Jackie Przybylowski Kinross Gold stock to Buy from Hold and raised the price target to $14.25 (52.4% upside potential) from $13.50. The analyst is positive about the company’s dividend announcement but thinks that the assumption to use a $1,200 per ounce gold price for its mine plans is conservative in the current environment. Further, he views this as a “major positive” and a sign of discipline, and believes that the company’s update should resonate well with investors.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 6 Buys and 2 Holds. The $11.05 average price target implies upside potential of about 18.2% to current levels. Shares have gained 97.3% year-to-date.