The economic uncertainty that has engulfed the markets has naturally made gold one of the soundest investments at this point. The price of the precious metal has gone up considerably in recent times as well and it is only natural for investors to look for options to ride that wave. One of the gold stocks that could prove to be an interesting option for investors is Kirkland Lake (NYSE:KL). Here is a closer look at the company and its prospects.
The coronavirus pandemic has come as a hammer blow for many companies but Kirkland has been one of the exceptions. The company’s financial strength has in fact had a boost during these months.
Recently, the company provided a highlight with regards to its financial situation. Kirkland stated that in the third quarter, it managed to boost its cash pile by as much as 58% sequentially to as much as $848 million. The bulk of the revenues in the third quarter was generated from sales of 332,000 ounces of gold.
In addition to that, Kirkland also sold a big block of its stake in Osiko Mining that brought in $109 million. On the other hand, an alliance with Newmont Mining generated $75 million.
Many companies in the gold sector have not been particularly great when it comes to dividend payouts in recent times. However, Kirkland has proven to be an exception in this regard as well.
Ahead of the earnings announcement for the third fiscal quarter, the company boosted its dividend payouts to $0.1875 per share, which reflects a rise of as much as 50%. Considering the fact that many gold companies do not pay any dividends at all, Kirkland emerges as an attractive option.
Kirkland has been consistent with regards to its dividends and the yearly payout ratio has been 5.6% on average over the past three years. The fact that the company has managed to raise its dividends payouts and maintained its robust financial health may be a cause for optimism among many.
At the end of the day, a mining company needs consistent exploration success in order to keep boosting its reserves and Kirkland has been fairly successful in that regard.
Kirkland’s Chief Executive Officer Tony Makush stated recently that the drilling program at Detour Lake has been quite encouraging. On top of that, success has also been reported from Fosterville property located in Australia.
The stock is trading at 10.6 times the operating cash flow and it is particularly attractive considering the fact that gold prices have rallied by 22% this year so far. Investors could consider keeping an eye on this stock at this point.
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