Highlighting 5 Commodity Dividend Stocks

Highlighting 5 Commodity Dividend Stocks


When most people think of commodities, complex and dangerous futures contracts are often the first things that come to mind. But there is an equity side to commodity investing that can be extremely lucrative.

If you have been receiving the free Commodity HQ Newsletter, you already know that commodity-focused stocks will not be a direct play on the hard asset world, but that their indirect exposure can come with a number of advantages. One of the biggest plus sides of commodity producing equities is a payout in the form of a dividend. A number of major commodity companies offer attractive yields that can add a steady income stream to your portfolio.

Below, we outline five commodity stocks with a DARS rating of 3.4 or higher to ensure that the firms will be a strong addition to any investing strategy.

CVR Partners (UAN): 9.15%

Quick Stats (as of 11/23/2012)

  • DARS Rating: 3.4
  • Dividend Yield: 7.71%
  • Annualized Divided: $1.98
  • Market Cap: $1.9 billion

This LP, based in Texas, engages in the production, distribution, and marketing of nitrogen-based fertilizers throughout North America. Though the firm was founded in 2007, it already has a market cap of nearly $2 billion and trades around 185,000 shares per day. With a dividend yield of nearly 8% and consistent but small increases, UAN has earned a DARS rating of 3.4 and figures to be a solid dividend payer for years to come.

Enterprise Products Partners (EPD): 5.03%

Quick Stats (as of 11/23/2012)

  • DARS Rating: 3.4
  • Dividend Yield: 5.03%
  • Annualized Divided: $2.60
  • Market Cap: $47.3 billion

Another LP, this firm provides energy services to producers and consumers of natural gas, natural gas liquids, crude oil and petrochemicals. With more than 35,000 miles of pipelines, EPD is a major player in the energy transportation industry. Its dividend increases may be small, but you can almost always bank on the payout increasing with each coming quarter, helping EPD earn a DARS rating of 3.4 [see also 25 Ways To Invest In Natural Gas].

ConocoPhillips (COP): 4.71%

Quick Stats (as of 11/23/2012)

  • DARS Rating: 3.5
  • Dividend Yield: 4.71%
  • Annualized Divided: $2.64
  • Market Cap: $47.3 billion

A household oil name known all around the world, Conoco is an oil and gas company based out of Houston. A market cap of $69 billion and average daily volume of 7.4 million make this the most popular stock on the list, but the yield of 4.7% certainly doesn’t hurt. A strong-performing stock and one of the most reliable dividends earns COP a 3.5 DARS rating and a spot as one of our recommended stocks.

Olin Corp (OLN): 3.89%

Quick Stats (as of 11/23/2012)

  • DARS Rating: 3.4
  • Dividend Yield: 3.89%
  • Annualized Divided: $0.80
  • Market Cap: $1.7 billion

The company engages in the manufacture and sale of chlor alkali products to commercial and industrial markets in the United States and internationally. OLN currently has a market cap just over $1.7 billion and trades well over 500,000 times each day. While it may not increase its dividends very often, you can expect a consistent payout from OLN, making it a 3.4 on our DARS scale [see also Commodity Plays in the 2012 Dividend Aristocrats].

Yamana Gold (AUY): 1.14%

Quick Stats (as of 9/28/2012)

  • DARS Rating: 3.4
  • Dividend Yield: 1.14%
  • Annualized Divided: $0.22
  • Market Cap: $14.1 billion

Gold miners have been risky investments over the past few years and are subject to a fair amount of volatility, but the recent announcement of QE3 has injected new popularity into these securities. The firm engages in the acquisition, exploration, development, and operation of precious metal properties principally gold. Its yield may not be as high as some of the others on the list, but given its unique industry and recent developments for gold, AUY may be an attractive buy. We currently have AUY at a 3.4 and it will be a good stock to watch as gold reacts to the open-ended QE set in motion by the Fed.

Disclosure: No positions at time of writing.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.