Many investors follow businesses that rise based on the hopes of big product launches or disruptive growth plans. But materials stocks are unique in that they provide the building blocks of a host of other enterprises.
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It’s not particularly glamorous, but it’s a vital part of the global economy. That means materials stocks can stand out because their goods have tangible value and broad uses.
In many cases, these raw materials see demand rise and fall based on the cyclical ups and downs of the broader global growth outlook, so they aren’t always sure things. However, they are usually logical investments that don’t require you to research complicated technologies or medical treatments. These stocks also can often provide reliable income thanks to steady baseline demand for their raw materials.
The following seven materials stocks are all valued at more than $7 billion, and all offer payouts of 2.5% or better — significantly higher than the 1.6% offered by S&P 500 components on average right now.
| Stock | Market Capitalization | Trailing Dividend yield |
| Barrick Gold Corp. (ticker: GOLD) | $28.4 billion | 2.5% |
| BHP Group Ltd. (BHP) | $143.9 billion | 5.9% |
| Dow Inc. (DOW) | $34 billion | 5.8% |
| LyondellBasell Industries NV (LYB) | $29.2 billion | 5.4% |
| Southern Copper Corp. (SCCO) | $55 billion | 4.9% |
| Suzano SA (SUZ) | $13.4 billion | 3.3% |
| Ternium SA (TX) | $7.4 billion | 4.8% |
Barrick Gold Corp. (GOLD)
— Market capitalization: $28.4 billion
— Trailing dividend yield: 2.5%
Barrick Gold is, perhaps unsurprisingly, a precious metal exploration company. It operates mainly in Africa and North America, and is headquartered in Toronto. Inflationary pressures coupled with broader investor uncertainty have lifted gold prices in the past year or so. GOLD stock has risen in kind, as it is predicting 7% to 10% revenue growth both this fiscal year and in fiscal year 2024. The environment doesn’t seem like it will change anytime soon, and that should keep its dividend humming along. It’s also worth noting that payouts of 10 cents a quarter don’t yield as much at present as some other stocks on this list, but those distributions are up significantly from the 4 cents paid as recently as 2019, which is an encouraging sign.
BHP Group Ltd. (BHP)
— Market capitalization: $143.9 billion
— Trailing dividend yield: 5.9%
BHP is one of the biggest mining and natural resources companies on the planet, operating in Australia, Asia, Europe, North America and South America. The company produces materials including copper, iron ore, coal, silver, gold, uranium and nickel. Commodity price inflation has provided a bit of a tailwind for shares, allowing BHP stock to outperform the broader market over the past year or two. But what should interest income investors is its yield that is almost four times that of the broader S&P 500 index. That payout is irregular by design, usually delivered twice annually and at a variable rate each time, but a strong outlook hints that generous dividends are likely to continue.
Dow Inc. (DOW)
— Market capitalization: $34 billion
— Trailing dividend yield: 5.8%
Dow provides “material science” solutions that include packaging, specialty plastics, performance coatings, and other chemicals and materials that are necessary inputs for a host of industries. Like many of the other stocks in the materials sector, Dow is tied closely to broader economic activity as a result of this interrelationship with its customers. A sluggish macroeconomic environment and uncertainty has weighed a bit on Dow’s performance as a result, but the good news is that it has a deep bench of clients and a scale that gives it staying power. With relationships across industries ranging from agriculture to electronics to health care to energy, Dow has diversification that will ensure its 70-cent dividend keeps getting paid on time each quarter.
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LyondellBasell Industries NV (LYB)
— Market capitalization: $29.2 billion
— Trailing dividend yield: 5.4%
LyondellBasell is a multinational chemical company incorporated in the Netherlands but with big U.S. operations in Houston as well as offices in London. LyondellBasell is a major producer of plastic resins and other chemicals, which means it rises and falls based on broad demand trends across the global economy. Things have been a bit soft lately, but for some reason Wall Street continues to deeply discount shares, with LYB trading at less than 10 times next year’s earnings and at only two-thirds of next year’s total sales. By comparison, the broader S&P 500 index trades for a forward price-to-earnings ratio of more than 19x and a price-to-sales ratio of almost 2x. The dividend is the icing on the cake, with a generous payout that remains just over half of next year’s projected earnings — and thus very sustainable.
Southern Copper Corp. (SCCO)
— Market capitalization: $55 billion
— Trailing dividend yield: 4.9%
Southern Copper, as you may have guessed by the name, engages in the mining of copper across South America. Interestingly enough, however, a byproduct of copper mining is the discovery of precious metals like gold and silver along the way. That means SCCO is also involved in these materials, too. Copper is a material that is pliable and highly conductive, so it’s used in all manner of industrial applications and manufacturing, from plumbing pipes to electronic wiring to electroplating and alloys in conjunction with other metals. And reserves of precious metals are obviously always a good thing to have around. Global uncertainties have weighed on this firm’s short-term outlook lately, but the generous $1 quarterly dividend should give long-term investors an incentive to buy and hold.
Suzano SA (SUZ)
— Market capitalization: $13.4 billion
— Trailing dividend yield: 3.3%
You’d be forgiven if you’ve never heard of Brazilian materials stock Suzano. But chances are you have come across the end result of its paper and pulp business, as it serves over 80 countries worldwide, including the U.S. Its offerings include paperboards used in packaging, tissue paper and even wood-based textile fibers. Like some of the other international dividend stocks on this list, SUZ dividends are variable and come annually rather than every single quarter. But based on the last payout at the end of 2022, this paper giant still has an above-average yield and is worth considering — particularly as 2023’s dividend date may be approaching.
Ternium SA (TX)
— Market capitalization: $7.4 billion
— Trailing dividend yield: 4.8%
Ternium is a South American and North American steel producer that serves customers in the U.S. and across Latin America, from Mexico to Brazil to Chile. Its business includes manufacturing steel slabs, rods, tubes and beams. It also mines iron ore for its own use as well as for sale to third parties. Steel is one of the building blocks of the construction industry (pardon the pun), and talk about a downturn in the Chinese real estate market in addition to previous concerns over a cooling U.S. economy have resulted in forecasts of a small revenue decline this fiscal year and next year. But pricing power remains strong thanks to commodity inflation, and Wall Street still apparently likes what it sees, with shares up more than 30% in the past year. Ternium’s $1.80 annual dividend paid in spring 2023 gives it a huge dividend to boot.
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7 Materials Stocks to Buy for Income originally appeared on usnews.com
Update 10/31/23: This story was previously published at an earlier date and has been updated with new information.
