Dividend Special: Top Companies In Every Major Commodity Sector

As the years have progressed, commodity exposure has evolved from a binary factor, either you have it or you don’t, to a necessary component of every portfolio. But as markets have been continually beaten down as of late, for many investors, finding the right commodity allocation has been something of a difficult task. A number of investors have stopped looking for growth, and taken cover in value funds that pay out annual yields in a time when no returns are guaranteed [see also The Guide To The Biggest Companies In Every Major Commodity Sector].

Dividend payments are a crucial element to investing, as they not only provide inflation hedges and steady income, but they also point to a company that is healthy. Typically only a strong company is able to pay out cold hard cash to its investors, where as a non-dividend company has an easier time cooking its books to make everything appear business as usual. Below, we outline companies with strong dividend payouts in a number of major commodity sectors, giving value investors a great way to add not only commodity exposure, but another income stream to your portfolio as well [for more commodity new subscribe to our free newsletter].

Agriculture

As far as this sector is concerned, Deere & Company (DE) is one of the top dogs. Branded “John Deere”, the company is the leading agricultural machinery manufacturer on the globe. DE makes everything from tractors and ATVs, to combine harvesters and balers. The firm has a market cap of $30.62 billion and trades about 5.8 million shares on a daily basis. While DE is not directly tied to any specific commodity, its products help cultivate and produce a wide variety of mainstay agricultural crops like corn and wheat, meaning that the health of the agriculture sector and underlying commodities alike will have a major impact on profits. DE pays out an annual dividend yield of 2.2% [see also Invest Like Jim Rogers With These Three Agriculture Stocks].

Aluminum

When it comes to aluminum, Alumina Limited (AWC) offers one of the best value plays. The company was formed in 2003 in a spin-off from Western Mining Company and is one of the largest companies on the Australian Securities Exchange. AWC’s business comes solely from a 40% stake in a joint venture with Alcoa which yields the extraction of bauxite, alumina, and aluminum smelting. The company controls roughly 17% of the global alumina market, making it a major player when it comes to this ultra-popular industrial metal. AWC pays out a healthy dividend of 3.6%, giving it an edge over Alcoa’s significantly smaller dividend.

Coal

Coal has long been a major source of energy for the world and while it may not be the cleanest burning fossil fuel, it will certainly remain an important energy source for many years to come. One of the most valuable coal miners comes from Yanzhou Coal Mining Company (YZC). The company is headquartered in the People’s Republic of China and is the only coal mining stock to be listed on all three of the Hong Kong, Shanghai, and New York Stock exchanges. YZC as a stock is popular among traders with a nice daily volume of 275,000 and a market cap eclipsing the $12.8 billion mark. Its dividend yield of 3% will make for a nice coal allocation to your portfolio while adding a steady stream of income [see also Commodity Investing: Physical vs. Futures].

Copper

As far dividend players in the copper sector go, few match the promise of Southern Copper Corporation (SCCO). The company is one of the largest publicly traded copper miners and is headquartered in Phoenix, Arizona. The majority of the company’s operations take place in Peru and Mexico given that over 75% of the corporation is owned the the Mexican miner Grupo Mexico. Along with copper, SCCO is a major producer of molybdenum, zinc, silver, and gold. SCCO is one of the highest-paying dividend companies on this list, coming in with an annual yield of 8%.

Gold

Gold has been an extremely popular commodity recently as its price has skyrocketed over the past few years. Now that the Swiss franc is officially pegged to the euro, many feel that this is the last safe-haven investment available. While there are a number of massive gold miners, Newmont Mining Corporation is one of the better value options. Newmont is based in Denver, Colorado, and is among the world’s largest gold producers. Active mines for the company lie all over the world in places like Indonesia, Australia, Ghana, and the US. As of the end of 2010, the company produced 5.4 million ounces of gold annually while boasting proven reserves nearing 94 million. While its dividend yield of 1.8% isn’t anything extreme, when compared to the rest of its sector, NEM makes for one of the best dividend plays [see also Three Reasons Why Gold Is Overvalued].

Lumber

Plum Creek Timber (PCL) is an investor favorite for gaining access to this sector as it is one of the largest public lumber firms in the country. PCL is the largest private landowner in the U.S., the majority of which, is timberland, giving a strong outlook for this big-time player in the lumber space. The stock has a current market cap of $5.7 billion and trades relatively actively, with over 1.5 million shares exchanging hands on a daily basis. Technically, PCL is a REIT, a move it made for tax and accounting advantages, though its business is derived from selling and producing various wood products. PCL pays out a dividend yield of 4.7%, something of a rarity for lumber firms.

MLPs

Master Limited Partnerships have long been known for their high yields as the offer exposure to the infrastructure of natural gas and crude oil industries. One of the better-paying companies comes from Enbridge Energy (EEP). The company majority owned by Enbridge, which operates some of the longest crude oil and liquids pipelines in the U.S. and Canada, is responsible for delivering more than two million barrles of crude oil each day, making it a very important pipeline. The company pays out a healthy yield of 7.5% but should be given a closer look, as a number of MLPs sporting high yields are designed to terminate after a certain period of time [see also [see also Top Seven Strangest Commodity Futures].

Metals

Though a number of specific metals have their own respective sectors, when it comes to general metals mining, few companies have the clout that BHP Billiton (BHP) has amassed. The company has a massive market cap of $207 billion, making it one of the largest companies in the world. BHP is responsible for mining a vast amount of metals including copper, gold, lead, zinc, iron ore, manganese, coal, aluminum, and others. The company has headquarters in both London and Australia while paying out a dividend yield of 2.9%, creating a good large cap value play for risk-averse investors.

Oil

Crude oil is one of the most prolific commodities as it has a major impact on a number of other commodities all around the world. As such, investments in this sector are incredibly popular, and a number of major oil companies offer competitive yields. British Petroleum (BP), however, offers one of the most enticing yields in the space, with an annual dividend yield of 4.7%. BP was under major scrutiny last year after the Deepwater Horizon spill caused massive damage in the Gulf of Mexico. While its stock price has yet to recover, the company was able to reinstate dividends to add value back to its large cap structure [see also Major Countries Burn Up Crude Reserves: Big Oil In Trouble?].

Steel

Steel is one of the most important industrial metals as its strength provides as a base for a number of important structures in skyscrapers, automobiles, and much more. One of the world’s largest steel makers comes from Companhia Siderurgica Nacional (SID). The company is based in Rio De Janeiro and is one of the biggest steel manufacturers in Brazil. The company accounts for nearly half of all steel products sold in the emerging market and also has significant operations in tin. The company also sets itself apart from the competition by being one of just a handful of companies to own its own iron ore source, a major component of steel production. SID pays out a dividend yield of 7.1% for those value investors who do not mind the emerging market exposure [see also Powerhouse Producers: Cocoa, Platinum, Rare Earth Metals].

[For more Commodity stories sign up for our free CHQ Newsletter.]

Disclosure: Jared is long BP.

This entry was posted in Academic Research, Agriculture, Aluminum, Copper, Exclusive, Gold, Industrial Metals, Steel, WTI and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

20 Responses to “Dividend Special: Top Companies In Every Major Commodity Sector”

  1. [...] August was a tumultuous months for markets across the board. The first ever downgrade of U.S. debts was handed out by S&P while the Fed announced it would be freezing rates for nearly two years. Markets reacted poorly to the headlines through out the month, swaying back forth by as much as 5%. Volume went through the roof as traders made a play to profit on volatile markets, while others pulled their assets and headed for higher ground and safer asset classes [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  2. [...] To call the last few months volatile would be an understatement; markets have been violently swinging back and forth, taking investors on a wild ride. While major indexes have experienced significant headwinds, other asset classes, like gold, have generally performed well. But when it comes to crude oil, a number of investors may be frustrated with the past two months, as the fossil fuel has taken something of a nosedive [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  3. [...] To call the last few months volatile would be an understatement; markets have been violently swinging back and forth, taking investors on a wild ride. While major indexes have experienced significant headwinds, other asset classes, like gold, have generally performed well. But when it comes to crude oil, a number of investors may be frustrated with the past two months, as the fossil fuel has taken something of a nosedive [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  4. [...] Mutual funds have long been one of the most popular ways to gain exposure to a number of assets. They are something of dinosaurs when it comes to investing, as a number of funds have long successful track records that other securities simply cannot compete with. The mutual fund space has tens of thousands of options and a number of those offer exposure to gold. Perhaps the biggest draw to this sector is the high dividend yields that a number of mutual funds tend to offer. Investors should note that most of these products require minimum investments in order to discourage less-serious, and ultra-small investors [see also Dividend Special: Top Companies In Every Major Commodity Sector]: [...]

  5. [...] can offer a number of advantages over other options. A fair amount of these companies offer strong dividend options and high liquidity for traders of all [...]

  6. [...] these companies place forward passionate dividend options and high liquidity for traders of all [...]

  7. [...] When it comes to bullion, you would be hard pressed to convince someone that the last ten years has been a terrible time to hold something like gold or silver. In 2000, and ounce of gold went for less than $500/oz. but is now trading for over $1,600/oz. Tripling your money in 10 years certainly isn’t an everyday feat and the power of these physical products and commodities should not be overlooked [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  8. [...] Over the years, value investing has emerged as one of the favorite strategies for a number of individuals and advisors. A steady stream of income that dividends provide can help protect a portfolio from market dips as well as adding an inflation hedge. The methodology has become so popular that some investors swear by it and are uneasy about making allocations to anything that lacks an important dividend yield. Many feel that value principles conflict with the commodity space; when someone thinks of commodity investing, they typically think of active trading of futures contracts or exchange traded products. But there are a number of securities that may be overlooked [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  9. Nora C says:

    Excellent article for a new bee investor in Commodities. Thanks a million!

  10. [...] Investing the equity side of the equation isn’t a pure play on crude oil, but it can make for a number of interesting opportunities that other investment vehicles simply don’t offer. Equities that focus on this commodity will most often consist of exploration, pipeline, or refining companies which can offer a number of advantages over other options. A fair amount of these companies offer strong dividend options and high liquidity for traders of all kinds [see also Dividend Special: Top Companies In Every Major Commodity Sector]: [...]

  11. [...] Commodity investing has been extremely popular in recent years as investors have discovered the benefits that these investments can offer for an individual portfolio. Exposure to commodities offers benefits like low correlation, inflation hedges, and also heavy exposure to some of the world’s fastest growing markets. But there is still something of a disconnect between income investors and commodities, as these investments are typically seen as growth plays or simply left for active traders. But those who overlook commodity stocks with even mediocre yields could be missing out [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  12. [...] Commodity investing has been extremely popular in recent years as investors have discovered the benefits that these investments can offer for an individual portfolio. Exposure to commodities offers benefits like low correlation, inflation hedges, and also heavy exposure to some of the world’s fastest growing markets. But there is still something of a disconnect between income investors and commodities, as these investments are typically seen as growth plays or simply left for active traders. But those who overlook commodity stocks with even mediocre yields could be missing out [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  13. [...] With real estate markets in the gutter, treasury yields at all-time lows, and equity markets plagued with instability, it’s no wonder that commodity investing has been surging in recent years. Many investors have hopped on board with the various benefits that these investments offer, including inflation protection, equity hedges, and diversification benefits to overall portfolios. Commodity are very powerful, yet often misunderstood tools. While the statistics vary, “as many as  90-95% of investors trading commodities lose money” says Matthew Bradbard of MB Wealth. That staggering figure has prompted significant backlash against commodities as of late, as investors have grown tired of these tumultuous investments [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  14. [...] Silver bullion is perhaps the safest and most hassle-free way to maintain silver exposure. The biggest issue when holding physical bullion comes from purchasing  the metal itself, which can run up costs exponentially depending on the  amount that someone wishes to purchase. Silver bullion allows an investor  to know exactly where their money went, what it is worth, and immediate  access to the metal should they ever need it. Silver also runs at a much cheaper cost than gold, allowing investors of all shapes and sizes to maintain exposure to bullion [see also Dividend Special: Top Companies In Every Major Commodity Sector]: [...]

  15. [...] The issues of tracking error and expenses aren’t the only place where the choice of structure matters; the difference between a commodity ETF and a commodity ETN can translate into sizable discrepancies in tax obligations. Most commodity ETPs that actually hold futures contracts–meaning the non-ETN segment of the universe–are structured as partnerships for tax purposes. That means that these securities are taxed at a blended rate between short-term and long-term capital gains (the 60/40 split results in an effective rate of about 23%). Moreover, these securities incur a tax liability annually regardless of whether shares were sold. And they require advisors to fill out a K-1, which can be an administrative headache to some [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  16. Eduled2002 says:

    Any information on water ETF”s(PHO, etc.)

  17. [...] The final month of the quarter saw a fair amount of volatility as far as commodities are concerned. With a number of global factors combining, performances were spread across the board. Cotton, in particular, had a strong March, as futures prices gained as much as 3.8% over the four week period. But as April and Q2 have begun, cotton has been struck with selling pressures. April’s losses have yielded to roughly 4%, erasing nearly all of the gains that copper futures had enjoyed in the previous month [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  18. [...] The final month of the quarter saw a fair amount of volatility as far as commodities are concerned. With a number of global factors combining, performances were spread across the board. Cotton, in particular, had a strong March, as futures prices gained as much as 3.8% over the four week period. But as April and Q2 have begun, cotton has been struck with selling pressures. April’s losses have yielded to roughly 4%, erasing nearly all of the gains that copper futures had enjoyed in the previous month [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  19. [...] Over the years, value investing has emerged as one of the favorite strategies for a number of individuals and advisors. A steady stream of income that dividends provide can help protect a portfolio from market dips as well as adding an inflation hedge. The methodology has become so popular that some investors swear by it and are uneasy about making allocations to anything that lacks an important dividend yield. Many feel that value principles conflict with the commodity space; when someone thinks of commodity investing, they typically think of active trading of futures contracts or exchange traded products. But there are a number of securities that may be overlooked [see also Dividend Special: Top Companies In Every Major Commodity Sector]. [...]

  20. [...] What Makes PID Unique: This ETF offers access to the popular “dividend achievers” strategy with an international twist. In order to be included in the underlying index, stocks must have increased their dividends for at least five consecutive years (a period that includes the downturn in 2008). The result is a portfolio of the most consistent international dividend payers, including both developed and emerging market constituents [see also Dividend Special: Top Companies In Every Major Commodity Sector].  [...]

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