Investors are often attracted to the low costs and ease of trading of exchange-traded funds (ETFs). These funds represent a basket of securities that track an underlying index, giving investors exposure to many different companies with specific characteristics. These companies are commonly related by asset class, company size, or industry.
As such, gold ETFs provide investors with exposure to the gold market without the need to purchase the physical metal or stocks of various gold companies. Only a handful of the available gold ETFs offers the bonus of paying dividends. Dividends are only available with equity-based gold ETFs that invest in the stocks of companies engaged in the gold industry.
ETFs that pay dividends offer some risk protection, especially in volatile markets, by providing investors additional investment cash flow. Even if an index is performing poorly, an investor may receive distributions of profit though quarterly or annual dividends.
Here's a look at four of the ETF names that track gold and pay dividends. All information is current as of May 6, 2022, unless otherwise indicated.
- Gold ETFs provide investors with exposure to the gold market without having to purchase physical gold or specific gold stocks.
- Sprott Gold Miners ETF has a dividend yield of 1.22%, though it only holds 33 different companies.
- The VanEck Vectors Gold Miners ETF holds 56 different companies and has a dividend yield of 1.15%.
- The iShares MSCI Global Gold Miners ETF has the highest distribution yield within article with a current yield of 2.08%.
- The VanEck Vectors Junior Gold Miners ETF tracks the performance of small- and mid-cap companies and issues dividends twice a year.
1. Sprott Gold Miners ETF (SGDM)
The Sprott Gold Miners ETF (SGDM) was launched in 2014. The ETF current holds equity in 33 different companies with each of these companies representing major names in gold and silver mining.
The market capitalization of the fund is just under $269 million. The ETF is strategically designed to mirror the performance of the Solactive Gold Miners Custom Factors Index TR. The benchmark index is also made up of 32 different precious metals companies.
The fund's annual operating expenses is 0.52%, though 0.02% of this is waived by the investment advisor of the fund resulting in a net fund fee of 0.50%. It offers a dividend yield of 1.22% and has paid a divided every year since 2018. The ETF last paid a dividend of $0.36 per share to investors on Dec. 22, 2021.
2. VanEck Vectors Gold Miners ETF (GDX)
The VanEck Vectors Gold Miners ETF (GDX), launched by Van Eck in 2006, has approximately $14.3 bllion in net assets, making it one of the largest and most widely traded gold ETFs. It trades on the NYSE Arca Exchange.
The ETF's portfolio is made up of 56 holdings, many of which are some of the world's largest gold companies. Companies are chosen based on market cap with a minimum of $750 million. Holdings include Newmont, Barrick Gold, and Franco-Nevada. The fund tracks the NYSE Arca Gold Miners Index.
The fund carries an expense ratio of 0.52%. With a dividend yield of 1.15%, GDX pays distributions annually. On Dec. 27, 2021, GDX distributed its most recent dividend of $0.5348 per share. The fund has issued a dividend every year since its 2006 inception except for 2008.
Gold ETFs that hold the physical precious metal or that hold gold futures contracts do not offer dividend yields.
3. iShares MSCI Global Gold Miners ETF (RING)
The iShares MSCI Global Gold Miners ETF (RING) was launched in 2012 by BlackRock. With $577 million in net assets, this ETF tracks the MSCI ACWI Select Gold Miners Investable Market Index. As such, it follows the performance of companies in both developed and emerging market economies whose primary revenue source is gold mining.
A total of 38 companies make up its portfolio. Its top three holdings include Newmont, Barrick Gold, and Agnico Eagle Mines Ltd. Together, they make up roughly half of the ETF's portfolio.
The fund has a dividend yield is 2.08% and offers a low expense ratio of 0.39%. The fund awards semi-annual distributions. Prior to issuing a $0.33 distribution per share on Dec. 17, 2021, RING issued a $0.31 distribution on June 16, 2021.
4. VanEck Vectors Junior Gold Miners ETF (GDXJ)
The VanEck Vectors Junior Gold Miners ETF (GDXJ) was launched by Van Eck in 2009 and has approximately $4.4 billion in net assets. This complementary offering to Van Eck's larger GDX ETF offers exposure to gold mining firms with lower market cap values.
The fund aims to mirror the Market Vectors Global Junior Gold Miners Index, which was designed to reflect the performance of small- and mid-cap companies that derive the majority of their revenue from gold and silver mining. The fund has 100 holdings with its largest position representing less than 6% of the total portfolio's value.
Major portfolio holdings include Pan-American Silver, Evolution Mining, and Yamana Gold. Unlike the larger funds, the concentration of the portfolio is much more diversified, with the top 10 holdings only making up less than 40% of the portfolio's assets.
The expense ratio for the fund is 0.52%, and the dividend yield is 1.76%. On Dec. 27, 2021, GDXJ issued its last dividend, distributing $0.7454 per share. The fund has issued a distribution in 11 of the 13 years since the fund's inception.
Do Gold ETFs Pay Dividends?
Some Gold ETFs pay dividends, such as the ones listed in this article. It is important to note dividend yields often change over time. In addition, companies and ETFs may elect to not distribute any dividends for a given distribution period, often a result of poor financial performance.
What ETF Pays the Highest Dividends?
The gold mining ETF that pays the highest dividend in this article is the iShares MSCI Global Gold Miners ETF (RING).
Does Vanguard Have a Gold ETF?
Vanguard does not current offer a gold mining ETF.
Which Gold ETF Is the Safest?
The gold ETF that is the safest will depend on individual risk tolerance and investing style. ETFs are generally safer than individual stocks due to their diversified nature. However, ETFs are also highly centralized within a specific industry or asset class. The risk level across all gold ETFs will be fairly similar.
The Bottom Line
There's a diverse offering of gold ETFs that range in assets under management size, number of companies held, and fund management expense. These funds also differ in their timing of distributions and dividend yields.