Dividend investing has continued to be a major theme in 2014, as investors look for steady income for their portfolios. Though commodity producers are not always known for their yields, there are several companies that are dishing out juicy dividends, with some yielding more than 20% [for more commodity news and analysis subscribe to our free newsletter].
For those looking to make a commodity play on the dividend space, we highlight three stocks offering attractive yields:
1. Northern Tier Energy LP (NTI)
Quick Stats (as of 4/7/14)
- Dividend Yield: 10.19%
- Annual Payout: $2.63
- Payout Frequency: Quarterly
Founded in 2010 and headquartered in Connecticut, Northern Tier Energy LP is an independent downstream energy company. The firm’s main operations are refining and retailing of various oil & gas products, such as gasoline, diesel, and jet fuel. Norther Tier Energy also owns and operates the Minnesota Pipeline, which transports 455,000 barrel of crude oil per day.
Though year-to-date the stock is in negative territory, many analyst believe the over 10%-yielding company is quite undervalued given its strategically located refineries and sound 2013 first quarter financial [see 13 High-Yielding Commodities For 2013].
2. Whiting USA Trust II (WHZ)
Quick Stats (as of 4/7/14)
- Dividend Yield: 22.26%
- Annual Payout: $2.91
- Payout Frequency: Quarterly
A subsidiary of Whiting Petroleum Corp., Whiting USA Trust II was founded in 2011 to own a term net profits interest in certain long-lived, predominantly producing properties. The properties, which primarily are located in the Rocky Mountain, Permian Basin, Gulf Coast and Mid-Continent regions, include interest in 1,300 gross producing oil and natural gas wells.
In addition to yielding more than 20%, Whiting USA Trust II has also exhibited sound financials and promising growth rates in its short history. Investors should note, however, that a closer look at the company’s dividend history shows payouts decreasing since May of 2012 [see also The Ten Commandments of Commodity Investing].
3. SandRidge Mississippian Trust II (SDR)
Quick Stats (as of 4/7/14)
- Dividend Yield: 31.67%
- Annual Payout: $2.35
- Payout Frequency: Quarterly
Another Trust, SandRidge Mississippian Trust II owns oil and natural gas wells throughout Oklahoma, Kansas, and Mississippi. The trust, which was formed in 2011, includes overriding royalty interest in 13 wells currently awaiting completion and 206 horizontal development wells to be drilled in the Mississippian formation (an area that spans across approximately 81,200 gross acres).
Investing in SDR, however, is not for the faint of heart; the trust’s market cap is only $658.6 million. In addition, SDR has exhibited several volatile price movements; over the trailing six-month period, the trust has tumbled more than 26%. But for those willing to take the risk, the more than 30% yield may warrant a closer look.
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Disclosure: No positions at time of writing.
