U.S. Global Investors Announces an Update to Its $5 Million Stock Buyback Program, Reaffirming Commitment to Shareholder Value and Continuing Monthly Dividend

Rhea-AI Summary

U.S. Global Investors (NASDAQ: GROW) has updated its stock repurchase program, allowing for the repurchase of up to $5 million worth of common stock between September 13, 2024, and December 31, 2024. This represents 14% of the Company's market capitalization. The move, along with the ongoing monthly dividend program, aims to enhance shareholder value.

The Company will continue to pay a monthly dividend of $0.0075 per share from October through December 2024, equating to a 3.54% annualized yield based on the September 18 closing price of $2.54. For the 12 months ended June 30, 2024, the Company's shareholder yield was 9.41%.

The press release also notes gold's recent performance, reaching a new all-time high intraday price of nearly $2,590 per ounce on September 16, 2024, attributed to geopolitical tensions and anticipation of Federal Reserve interest rate cuts.

Positive

• Announcement of $5 million stock buyback program, representing 14% of market capitalization
• Continuation of monthly dividend program with $0.0075 per share
• High shareholder yield of 9.41% for the 12 months ended June 30, 2024
• Gold price reaching new all-time high, potentially benefiting company investments

Negative

• None.

Insights

Financial Analyst

U.S. Global Investors' $5 million stock buyback program, representing 14% of its market cap, is a significant move. This, coupled with the $0.0075 monthly dividend (yielding 3.54% annually), demonstrates a strong commitment to shareholder value. The 9.41% shareholder yield outperforms the 10-year Treasury, making GROW potentially attractive to income-focused investors.

However, investors should note that the company's market cap is relatively small and the buyback's impact on stock price and liquidity needs careful monitoring. While the strategy aligns with successful programs like Oracle's, the scale and market conditions differ significantly. The company's focus on gold investments could provide a hedge against economic uncertainties, but it also exposes it to commodity price volatility.

Market Research Analyst

The gold market's recent performance, hitting a new all-time high of nearly $2,590 per ounce, is important for U.S. Global Investors' outlook. With gold trading above its 50-day moving average and the 10-year Treasury yield at a 52-week low of 3.6%, the company's gold-focused investments could see increased interest. This aligns with the historical inverse relationship between gold prices and Treasury yields.

However, investors should be cautious. While current trends favor gold investments, market conditions can rapidly change. The company's strategy heavily relies on the continued strength of gold and other specialized sectors, which may not always outperform broader market indices. Diversification within the company's offerings and adaptability to changing market conditions will be key factors to watch.

San Antonio, TX, Sept. 20, 2024 (GLOBE NEWSWIRE) -- U.S. Global Investors, Inc. (NASDAQ: GROW) (“the Company”), a registered investment advisory firm with longstanding experience in global markets and specialized sectors, today announces an update to the stock repurchase program, allowing for the orderly and systematic repurchase of up to $5 million worth of the Company’s common stock between September 13, 2024, and December 31, 2024. This represents 14% of the Company’s market capitalization. This strategic move, combined with the ongoing monthly dividend program, reinforces the Company’s dedication to delivering shareholder value through effective capital allocation and consistent returns.

The Company’s Board of Directors (“the Board”) has approved the update to this buyback program as part of U.S. Global Investors’ strategy to return excess capital to shareholders, reflecting confidence in the Company’s long-term growth prospects and financial health. This buyback is a substantial commitment, aligning the Company with the best practices of highly successful buyback programs seen at companies like Oracle, which has been repurchasing its shares since 2012, and supported by Warren Buffett’s philosophy of returning value to shareholders.

“We believe that repurchasing our shares at current levels offers a compelling opportunity to enhance shareholder value,” says Frank Holmes, CEO of U.S. Global Investors. “By reducing the number of outstanding shares, we aim to increase earnings per share (EPS) and provide greater ownership value to our shareholders. This buyback, alongside our ongoing monthly dividend, demonstrates our confidence in the company’s strong financial foundation and future potential.”

Under the repurchase plan, the Company will continue to purchase shares when the Class A shares are equal to or below the previous day’s closing price or if the stock trades below a certain amount per share. The Company may also purchase a block of up to 100,000 shares, on a downtick, usually at the bid or below, in accordance with Rule 10b-18.

Prioritizing Shareholder Yield and Dividend Income for Sustained Stock Price Growth

The Board approved payment of the $0.0075 per share per month dividend beginning in October 2024 and continuing through December 2024. The record dates are October 14, November 11 and December 16, and the payment dates will be October 28, November 25 and December 30.

At the September 18, closing price of $2.54, the $0.0075 monthly dividend equals a 3.54% yield on an annualized basis. For the 12 months ended June 30, 2024, the Company’s shareholder yield was 9.41%, which was higher than the yield on the 10-year Treasury that same day.[1]

“We understand that having a strong shareholder yield is important for stock growth,” Mr. Holmes says. “It measures how much value a company returns to its shareholders through dividends, buybacks and debt reduction. We believe that by focusing on these items, we can create a more attractive investment proposition.”

Gold's Surge Above $2,500 an Ounce as Interest Rates Set to Fall

The Company would also like to take this opportunity to note the positive performance of gold, an important asset to many of the Company’s investments.

“On September 16, gold recorded a new all-time high intraday price of nearly $2,590 per ounce on geopolitical tensions and anticipation that the Federal Reserve was set to cut interest rates, which it did on Wednesday, September 18, 2024. The yellow metal is trading above its 50-day moving average, which we consider to be a bullish signal and which many trend investors follow,” says Mr. Holmes.

“As many readers are aware, the price of gold has historically shared an inverse relationship with Treasury yields. The yield on the 10-year Treasury note, now below its 200-day moving average, has fallen to a 52-week low of 3.6%. This decline is attributed to the ongoing decrease in the annual inflation rate and the increased probability that the Fed will begin reducing short-term rates.”

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About U.S. Global Investors, Inc.
The story of U.S. Global Investors goes back more than 50 years when it began as an investment club. Today, U.S. Global Investors, Inc. (www.usfunds.com) is a registered investment adviser that focuses on niche markets around the world. Headquartered in San Antonio, Texas, the Company provides investment advisory and other services to U.S. Global Investors Funds and U.S. Global ETFs.

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The continuation of future cash dividends will be determined by U.S. Global’s board of directors, at its sole discretion, after review of the Company's financial performance and other factors, and is dependent on earnings, operations, capital requirements, general financial condition of the Company and general business conditions. The shareholder yield is a ratio that shows how much money the company is sending back to shareholders through a combination of dividends and share repurchases.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the press release were held by any accounts managed by U.S. Global Investors as of 6/30/2024.

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[1] The Company computes shareholder yield by adding the percentage of change in shares outstanding to the dividend yield for the 12 months ending June 30, 2024. The Company did not have debt; therefore, no debt reduction was included.

Attachment

• Inverse Relationship Between Gold and Bond Yields

FAQ

What is the value of U.S. Global Investors' (GROW) stock buyback program?

U.S. Global Investors (GROW) has announced a stock buyback program of up to $5 million worth of common stock between September 13, 2024, and December 31, 2024.

What is the monthly dividend amount for U.S. Global Investors (GROW) stock?

U.S. Global Investors (GROW) will continue to pay a monthly dividend of $0.0075 per share from October through December 2024.

What was U.S. Global Investors' (GROW) shareholder yield for the 12 months ended June 30, 2024?

U.S. Global Investors' (GROW) shareholder yield was 9.41% for the 12 months ended June 30, 2024.

What was the recent all-time high price for gold mentioned in the U.S. Global Investors (GROW) press release?

The press release mentioned that gold reached a new all-time high intraday price of nearly $2,590 per ounce on September 16, 2024.