These commodity investments pay shareholders.
After a rough few years, commodity prices finally seem to be holding firm — or in some cases, moving steadily higher. Crude oil recently hit its highest prices since late 2014. Gold also recently hit its highest prices since mid-2016. And lesser commodities, from palladium to copper, are looking strong early this year, too. Investing directly in commodities, however, can be difficult. Trading oil futures or buying and storing bars of gold can bring complexity and expenses. However, if you invest indirectly via commodity-related companies, you can easily access this sector. If you’re interested in buying into commodities via income-generating stocks, here are a few ideas for your portfolio.
Alliance Resource Partners (Nasdaq: ARLP)
Coal miner Alliance Resources isn’t exactly at the top of the list for investors looking at dynamic and fast-growing companies. But don’t count out coal altogether. Alliance is one of the few well-run coal companies with stable financials and a reasonable debt load that has helped it avoid some of the pain at its larger peers. Alliance’s coal mines in the Illinois Basin are among the cheapest to operate, which allows decent margins even when competing with super-cheap natural gas. Coal remains a crucial part of the global economy. That adds up to a measure of stability and a tremendous dividend yield for aggressive investors.
Current yield: 11.3 percent
Vale SA (VALE)
One of the world’s largest producers of base metals like iron and nickel, this South American mining conglomerate isn’t one of the most dynamic stocks. But with a nearly $80 billion operation extracting crucial materials from the earth, you can be sure that this company is an important part of the global economy. Reliable demand and operations help support a nice dividend. And thanks to steady increases in commodity prices lately, this miner has managed to jump about 40 percent in the last six months or so, while the broader Standard & Poor’s 500 index has added about 15 percent in the same period.
Current yield: 2.8 percent
Exxon Mobil Corp. (XOM)
While there always seems to be talk of fast-growing technology companies, there aren’t nearly as many headlines about the slow-and-steady operations of Exxon. However, valued at more than $330 billion and booking more than $300 billion in annual revenue, it is one of the 10 biggest companies in the U.S. by almost any measure. That reach gives Exxon an unrivaled stability, and helps support one of the most reliable dividends on Wall Street. Exxon has paid a dividend in some form for more than 100 years, and has increased its payout at least once annually for the past 35 consecutive years.
Current yield: 3.9 percent
Marathon Petroleum Corp. (MPC)
Unlike the enormous integrated oil company Exxon, Marathon is a much smaller energy company focused primarily on refining gasoline and bringing that fuel to market. That means it doesn’t have quite the broad insulation from market volatility. However, the focus has worked in its favor as rising oil prices and strong margins in refining powered strong performance lately. Specifically, Marathon is up 30 percent in the last year and has roughly doubled since early 2016 thanks to the recovery in oil prices. The stock’s dividend has also increased dramatically in just two years, from 32 cents quarterly to 46 cents.
Current yield: 2.8 percent
Enterprise Products Partners (EPD)
Looking beyond oil but sticking with a strong energy market, midstream energy company Enterprise Products Partners operates storage facilities and pipelines, connecting exploration companies with end users and buyers. At $55 billion in market value and as one of the biggest operators in the space, it’s hard to think of how the energy industry would function without EPD infrastructure. And thanks to its spot as a middle man in the processing of natural gas, it has a reliable source of revenue. There’s admittedly not a ton of growth here, but with a dividend more than double the typical energy stock, the income potential is appealing.
Current yield: 6.6 percent
Randgold Resources (GOLD)
Mid-sized gold miner Randgold Resources has been on a rocky ride as gold prices have bounced. In fact, share prices are right where they were about five years ago in the mid-$80 range, despite a run-up to $120 and a crash as low as $60 along the way. If you’re a long-term investor simply looking for a company that will hang tough and deliver reliable income, then this miner is worth a look. GOLD’s dividends have steadily marched higher even as shares have stayed volatile, meaning modest long-term performance for those who can stomach the short-term ups and downs.
Current yield: 3.5 percent
BHP Billiton (BHP)
Australian mega-miner BHP Billiton has its fingers in a host of commodities, from oil and coal to copper and iron ore. The $120 billion corporation operates in some 25 countries. This gives BHP Billiton a diversification that that other commodity stocks simply can’t match. By extracting a bunch of different commodities in a bunch of geographies, the firm isn’t as beholden to fluctuations in the marketplace. That allows for a stable and pretty substantial dividend payment. BHP stock has run-up about 15 percent in the last three months to outperform the broader stock market as a result.
Current yield: 4 percent
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7 Commodity Stocks to Buy for Great Dividends originally appeared on usnews.com
