These commodity and materials stocks provide above-average dividends.
In 2022, there are few things that seem to be working on Wall Street. But while the pressures of an energy crisis in Europe and widespread commodity inflation is creating hardship for some firms, it has actually paid off nicely for materials stocks. That’s in part because these companies produce the raw materials that are consistently rising in price. But it’s also because these key components are the first step in global supply chains and industrial activity, and they have reliable demand in many markets. The following seven stocks all offer above-average dividends, and some have even outperformed the market with significant gains in an otherwise challenging year.
BHP Group Ltd. (ticker: BHP)
BHP is a $180 billion diversified materials conglomerate that touches a host of materials from coal and petroleum to copper, iron ore and even potassium salts, known as potash, that go into fertilizers. Thanks to widespread operations and a variety of customers, BHP offers diversification and stability to investors. Though its dividends aren’t as consistent as U.S. stocks and didn’t pay a single distribution in all of 2021, BHP’s most recent September distribution of $3.50 per share means a yield that’s about five times the broader stock market. If you don’t mind the lack of consistency in dividends or a bit of risk, BHP is a materials stock worth a look for its broad reach and future income potential.
Dividend yield: 6.8%
LyondellBasell Industries NV (LYB)
LyondellBasell is a specialty chemicals company that operates in the U.S., Europe and Asia. And just as LYB is geographically diverse, it also has a big diversity in the kinds of chemicals it produces, including plastics used in the packaging of household goods, advanced polymers used in construction and automotives industries, and specialty ingredients for cleaners and cosmetics. On top of that, LYB also operates a crude oil refinery. The stock has dipped slightly in 2022, but has been much more stable than the typical S&P 500 component on top of offering a yield that’s more than three times this benchmark’s average.
Dividend yield: 5.8%
Nutrien Ltd. (NTR)
Nutrien is an agricultural materials company that provides various fertilizers, animal feed, seeds and other similar products through approximately 2,000 retail locations in the U.S., Canada, South America and Australia. Though these may not immediately spring to mind as the kinds of chemicals or materials that support industrial activity, the reality is that there are few things more important to the global economy than food. There’s also consistent demand for the products that Nutrien is producing, regardless of the macroeconomic backdrop. That steady revenue supports consistent and generous income for investors, and it has helped the stock tack on a nearly double-digit return this year while the rest of Wall Street has struggled.
Dividend yield: 2.3%
Rio Tinto PLC (RIO)
First things first: Megaminer Rio Tinto has a tremendous yield. But that’s based on the last year of payouts, which came as two payments, one of $4.79 in March and one of $2.67 in August. This company is anything but consistent with its twice-annual distributions, and over the last 10 paydays, payments ranged between $1.27 and $5.61 per share. That said, the current yield is pretty eye-popping, and the underlying business is very attractive if you’re looking for a materials stock. Rio operates facilities including refineries, smelters, mills and other materials-related processes in addition to the mines themselves. Those facilities process aluminum, copper, diamonds, gold, iron ore and uranium. Founded in 1873 and headquartered in London, this is one of the preeminent names in metals and has the scale and income potential that makes it worth a look.
Dividend yield: 12%
Soquimich (SQM)
Like some of the other stocks on this list, Soquimich doesn’t pay consistent dividends like your typical blue-chip stocks. But based on its most recent history of payouts, it’s worth a look due to its tremendous income potential. Formally known as Sociedad Química y Minera de Chile, SQM is a Chile-based lithium producer that has been surging, thanks to strong demand for high-tech batteries for electric vehicles and smartphones. In fact, it has blown away almost every other stock on Wall Street with an amazing 90% run since Jan. 1. That’s because it’s plotting a tremendous 260% revenue growth this fiscal year and is riding the trend of next-gen battery technology. There’s certainly risk here, but also the potential for some big rewards.
Dividend yield: 4.7%
Southern Copper Corp. (SCCO)
As you probably can figure out by its name, Southern Copper is a leading miner and refiner of copper — mostly via mines in the Southern Hemisphere. It also produces zinc, lead, copper, silver, gold and other materials extracted across its holdings of more than 3,300 square miles worldwide. But copper is in the firm’s name for a reason, as it is the primary revenue source for the business. This material is used in everything from electrical wires to pipe fittings to jewelry to cookware, so it has been under pressure in 2022 on fears of a cyclical downturn. However, this $38 billion company and its generous dividends are still worth a look for long-term investors willing to look beyond this year’s volatility.
Dividend yield: 8.1%
SunCoke Energy Inc. (SXC)
SunCoke is one of the few stocks that’s actually up on the year, in part because it is a unique company with operations that benefit from the current environment. SunCoke is a coal company, and as such was beaten down in prior years on fears that the dirty fossil fuel was on the outs. But an energy crisis in Europe and rising oil and natural gas prices have increased demand for thermal coal. At the same time, inflationary pressures have lifted the of price steel, which requires “coking” coal as part of its production, meaning there is demand from steelmakers, too. SXC has paid a reliable 6-cent-per-share dividend each quarter since 2019, including across pandemic-related disruptions, and the company recently raised that to 8 cents in August. That track record should give investors confidence in this materials stock.
Dividend yield: 4.7%
7 materials stocks to buy for income:
— BHP Group Ltd. (BHP)
— LyondellBasell Industries NV (LYB)
— Nutrien Ltd. (NTR)
— Rio Tinto PLC (RIO)
— Soquimich (SQM)
— Southern Copper Corp. (SCCO)
— SunCoke Energy Inc. (SXC)
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7 Materials Stocks to Buy for Income originally appeared on usnews.com
Update 10/27/22: This story was previously published at an earlier date and has been updated with new information.
