Commodities are the building blocks of the global economy, and they can make solid investments for both price appreciation and dividend income.
Ranging from copper used in construction and automobiles to natural gas that powers a host of industries — including the emerging artificial intelligence sector — commodities can also offer a hedge against inflation.
For example, the Iran war has helped push up oil prices while at the same time benefiting oil producers. If inflation is caused by a strong economy, that generally correlates with solid demand for raw materials produced by commodities companies.
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“Recent developments in the economy, particularly regarding inflation, have caused many investors to focus on commodities as a hedge against the inherent economic risk,” says Angelo DeCandia, professor of business at Touro University.
Some do this through the futures market, but those derivatives contracts aren’t set-and-forget investments because they often must be constantly rolled over into fresh contracts. They also require the use of leverage, which can magnify gains and losses.
“As a result, they are not suitable for all investors, and that is where commodity stocks come into play,” DeCandia says. “They provide the opportunity to hedge in the more familiar equity markets and provide the same advantages without the complexity of futures trading.”
A risk to using commodities as an inflation hedge is that central banks might raise interest rates to attempt to keep inflation under control. Higher interest rates increase the cost of borrowing required for long-term, expensive development of commodities projects that won’t pay off for many years.
Another risk is that rising input costs also make developing and running commodities projects more expensive.
“Investors should always be aware that companies producing commodity products are not in complete control of their costs,” DeCandia says. “The cost of inputs is subject to the commodity markets, which are themselves affected by everything from geopolitical events to basic supply and demand.”
This risk is one of the reasons commodities stocks that pay dividends are so popular.
“Beyond the benefits of inflation hedging provided by commodity stocks, there is also the possible opportunity to create an income stream which will help to further mitigate the downside of rising commodity prices,” DeCandia says.
There is a wide variety of commodities and companies that produce them, with each market having its own supply and demand nuances. Here’s a look at seven commodities companies on that spectrum that pay solid dividends:
| Stock | Forward dividend yield |
| Flex LNG Ltd. (ticker: FLNG) | 10.2% |
| Canadian Natural Resources Ltd. (CNQ) | 4.5% |
| Cenovus Energy Inc. (CVE) | 2.5% |
| Enbridge Inc. (ENB) | 5.1% |
| Rio Tinto Group (RIO) | 4.3% |
| BHP Group Ltd. (BHP) | 3.3% |
| AngloGold Ashanti PLC (AU) | 5.6% |
Flex LNG Ltd. (FLNG)
Liquefied natural gas, or LNG, is a growing market, especially with exports from the U.S. Because of fracking and horizontal drilling, the U.S. is the biggest natural gas producer and a powerhouse exporter.
Because gas can be produced cheaply in the U.S., it is economical to build massive liquefaction plants to chill the fuel and then ship it to destinations around the world, such as Europe and Asia.
Flex employs a fleet of 13 carriers to ship natural gas in super-chilled liquefied form to end users.
“It is a very attractive play for those investors willing to take larger pricing risks in order to receive bigger rewards,” DeCandia says. Nonetheless, the risks are reasonable and probably a lot lower than a straight bet on the futures markets.
Flex is less directly affected by commodity prices than natural gas producers since its primary business is to provide seaborne transportation of LNG worldwide, DeCandia says.
“Its performance is somewhat buffered by the fact that it provides a service to the commodity industry, rather than being directly involved in the production of a commodity,” he says. “This should provide some comfort to investors concerned about the extreme volatility of the commodity markets.”
The company has a dividend yield of more than 10%.
Canadian Natural Resources Ltd. (CNQ)
This oil and natural gas producer has operations in western Canada’s oil sands area, the U.K. portion of the North Sea and offshore Africa.
The stock is yielding more than 4%, has a relatively low price-to-earnings (P/E) ratio of 12 and is roughly in the middle of its 52-week high and low range.
“In addition to these very attractive numbers, this company is well established and very diversified, with activities (spanning) the acquisition, exploration and development of crude oil and natural gas,” DeCandia says. “Savvy investors should seek comfort in this company, which delivers strong returns without a lot of risk.”
Cenovus Energy Inc. (CVE)
This energy company’s portfolio includes oil sands and conventional crude oil projects in Canada as well as natural gas production offshore China and Indonesia. It also has refining and marketing operations in Canada and the U.S.
CVE is also between its 52-week high and low, which means it has the opportunity to move higher without breaking into record territory. Cenovus also has a relatively modest P/E ratio of 14, providing investors with another bit of peace of mind.
“Cenovus Energy provides good opportunity at a reasonable entry level for those investors seeking to create a dividend income stream at a reasonable price,” DeCandia says. “The dividend yield is a respectable 2.5%, thus providing investors with the inflationary buffer which they seek.”
Enbridge Inc. (ENB)
This company transports and distributes oil, natural gas and natural gas liquids through a network of pipelines. Its dividend has proven durable, and the company is known for reliable cash flow.
In addition to its pipeline network, the company has a presence in gas utilities and storage and is advancing renewable energy projects, including renewable natural gas, carbon capture and storage, and hydrogen.
Enbridge’s stability is underpinned by long-term contracts that include inflation protection and revenues that are largely insulated from commodity volatility.
Rio Tinto Group (RIO)
Turning to mining, this diversified global player offers a payout of 4.3%.
Rio Tinto produces aluminum, copper and iron ore and is developing a lithium project. Copper demand is expected to increase because it is needed to build renewable energy installations and connect them to electric grids. Copper and lithium are key materials for electric vehicles.
These projects position the company for growth in the renewable energy sector as well as the more traditional iron ore business that feeds the global steel industry.
BHP Group Ltd. (BHP)
This global mining giant offers a similar investing case to Rio Tinto.
Amid the global energy transition away from fossil fuels for electricity production, BHP has been exiting thermal coal, which is used to generate electricity and is a major source of planet-warming gas.
BHP has been investing more in copper, as well as in mining potash, a key fertilizer ingredient that will become even more important as the global population continues to grow.
Like its competitor Rio Tinto, BHP is known for capital discipline, including not overextending itself to pay its dividend. While that may not always make for the biggest payout, it can help with the durability of yield.
AngloGold Ashanti PLC (AU)
This mining company is focused on gold and extracts silver as a byproduct. It has mining operations in 10 countries on four continents, giving it enviable jurisdictional diversification.
“After a strong 2025, the shares are down … this year amid softer gold prices, offering an attractive entry point with solid potential for both capital appreciation and income from the dividend,” says Vince Stanzione, CEO of First Information, a publisher of educational materials related to financial spread betting and derivatives trading.
He notes that the company’s all-in sustaining cost, an important gold mining industry metric, is under $2,000 per ounce. So, even though gold prices have pulled back from record highs, its current price around $4,000 gives AngloGold plenty of margin.
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7 Best Commodity Stocks to Buy for Solid Dividends originally appeared on usnews.com
Update 06/30/26: This story was previously published at an earlier date and has been updated with new information.
