By Todd Shriber

New York, February 20( - Most income investors know the standby sectors to head to in the hunt for strong yields and tidy payouts. Consumer staples, integrated oil companies, utilities, mater limited partnerships and royalty trusts are all homes to robust yields and dependable, rising dividends. But did you know gold miners offer more than just exposure to the precious metal? That's right. Some gold miners are becoming dividend plays in their own right.

Some gold miners even link their dividends to the price of gold. Familiar names using this strategy include Eldorado Gold (NYSE: EGO) and Newmont Mining (NYSE: NEM). Regardless of what dividend strategy a gold miner is using, it's good news for investors that these companies are deploying more cash toward shareholder rewards because, until recently, the mining group was a not dividend hunter's stomping ground.

Even today, Eldorado Gold and Barrick Gold (NYSE: ABX) yield just 1.3% each. However, in the case of Barrick, some analysts think the company could afford to double its payout. Newmont's annual payout increases at a rate of 20 cents per share for each $100-per-ounce rise in the average realized gold price, MarketWatch reported. Both companies increased their dividends in October 2011.

Speaking of increased dividends, earlier this month, Canada-based Agnico-Eagle Mines (NYSE: AEM) said it's raising its dividend 25%. Dahlman Rose analyst Adam Graf thinks Barrick could double its dividend this year and top that increase, should it so choose, in 2013, Minyanville reported.

Overall, the dividend picture for large-cap gold miners is improving, but there are still issues to consider. First, gold miners are starting or boosting their dividend programs from relatively low stating points. Said differently, a quarterly dividend of five cents a share isn't great, but it looks compared to no dividend at all. Second, there are still plenty of gold miners that prefer to reinvest excess cash in production and to keep with higher costs. Third, there is the issue of those higher costs. As fuel and equipment costs rise, miners may think twice about starting or upping dividends.

Then there is the matter of volatility. A dividend linked to the price of gold is a great idea...when the yellow metal is rising. No Newmont investor is going to complain about the dividend if the price of gold goes to $5,000 (just a hypothetical scenario). But if the price gold suddenly plunged, miners' dividends could be a thing of the past. At the very least, the sector would probably be home to a lot of dividend cuts and suspensions. Again, that's a hypothetical scenario, but not an impossible one.

The bottom line when it comes to mining dividends is that investors will be best served sticking with companies with the best balance sheets that have the capacity to grow payouts and whether volatility in gold prices.

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