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10 Commodity Dividend Stocks With Over 4% Yield

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·8 min read
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In this article, we discuss the 10 commodity dividend stocks with over 4% yield. If you want to skip our detailed analysis of the commodity sector and its outlook, go directly to 5 Commodity Dividend Stocks With Over 4% Yield.

The commodity market is thriving, fueled by increased demand for energy, raw materials, and agricultural products as the world resumes economic activity following the pandemic. Oil, natural gas, and precious metals prices have risen in the previous year, resulting in record profits for major commodity companies around the world. The sector's continuous upswing attracts investors who see commodity assets as a hedge against inflation.

Commodities outperformed in 2021 and will continue to do so this year, bolstered by the ongoing conflict between Russia and Ukraine, according to market analysts. Refinitiv's CoreCommodities CRB Index, a pool of 19 commodities that serves as a representative indicator of commodity markets including energy, metals, and agriculture, is up 28.9% year to date and up 58.4% in the previous year as of March 22.

As a result of the surge in energy and raw material prices last year, major commodity companies such as Vale S.A. (NYSE:VALE), Exxon Mobil Corporation (NYSE:XOM), and Rio Tinto Group (NYSE:RIO) all reported record profits, allowing them to provide greater returns to shareholders through dividends and share repurchases.

Our Methodology

We looked for dividend-paying commodity stocks that offer a dividend yield higher than 4% and ranked them from lowest to highest yield. We selected highly rated commodity companies on our list that are operating in the oil and gas, basic material, and precious metals sectors.

Photo by Russ Ward on Unsplash

Commodity Dividend Stocks With Over 4% Yield

10. Valero Energy Corporation (NYSE:VLO)

Dividend Yield as of March 21: 4.33%

Number of Hedge Fund Holders: 35

Valero Energy Corporation (NYSE:VLO) claims itself as the world's largest independent refinery, managing 15 refineries in the US, Canada, and the UK. The Texas-based company is also one of the biggest producers of corn ethanol globally. Valero Energy Corporation (NYSE:VLO) also engages in renewable energy generation, with 33 wind turbines in the US.

Valero Energy Corporation (NYSE:VLO) reported strong fourth-quarter earnings, owing to higher refinery throughput volumes and a higher refining margin. In the period, the company reported earnings per share of $2.47, exceeding analyst expectations by $0.63. Besides that, between October and December, the company generated more volume, with refining throughput volumes climbing to 3,033 MBbls/d, up from 2,550 MBbls/d in Q4 2020.

Aside from consistently exceeding earnings expectations in the previous quarters, Valero Energy Corporation (NYSE:VLO) also offers an attractive dividend yield of 4.33% to investors. As of March 21, the stock returned nearly 32% to shareholders in the past three months.

Market analysts see Valero Energy Corporation (NYSE:VLO) is about to ride the energy sector bull run given the continuous rally in natural gas prices. On March 8, BofA analyst Doug Leggate increased his price target for the commodity stock to $135 from $107 with a Buy rating. Meanwhile, a total of 35 hedge funds were long Valero Energy Corporation (NYSE:VLO) in Q4 2021, up from 32 funds in the quarter earlier.

9. Enviva Inc. (NYSE:EVA)

Dividend Yield as of March 21: 4.34%

Number of Hedge Fund Holders: 5

Sustainable wood pellet producer Enviva Inc. (NYSE:EVA) is another high dividend-paying stock coming from the basic materials sector. In February, Enviva Inc. (NYSE:EVA) upped its quarterly dividend payout to $0.86 per share, leading to an annual dividend of $3.30 per share. The company also reiterated its full-year dividend guidance of $3.62 per share for 2022, representing a 10% increase over 2021.

Enviva Inc. (NYSE:EVA) produces wood pellets utilized in bioenergy in ten plants located in six different states across the United States. Over the next five years, the Maryland-based wood pellet producer plans to double its wood pellet production capacity to around 13 million metric tons per year. In its fourth-quarter earnings report, the company announced a number of corporate customer agreements, including a 15-year contract with a new European industrial customer. The agreement calls for annual volumes of around 600,000 metric tons per year by 2030, with initial deliveries beginning in 2023. Following this announcement, RBC Capital analyst Elvira Scotto increased her price target for Enviva Inc. (NYSE:EVA) to $85 from $78 and maintained her Outperform rating on the shares.

As of the end of December 2021, Inclusive Capital held the largest position in Enviva Inc. (NYSE:EVA). The San Francisco-based investment management firm owns 5.7 million shares of the clean energy stock worth over $402 million. Just like Vale S.A. (NYSE:VALE), Exxon Mobil Corporation (NYSE:XOM), and Rio Tinto Group (NYSE:RIO), Enviva Inc. (NYSE:EVA) is one of the high-yielding commodity stocks that look appealing to income investors.

8. LyondellBasell Industries N.V. (NYSE:LYB)

Dividend Yield as of March 21: 4.41%

Number of Hedge Fund Holders: 35

Chemical and plastic company LyondellBasell Industries N.V. (NYSE:LYB) is one of the high-yielding dividend stocks in the materials sector. The Houston-based company has consistently increased its annual dividend payout in the last 11 years. Offering a yield of 4.41%, LyondellBasell Industries N.V. (NYSE:LYB) currently pays its shareholders an annual dividend of $4.52 per share. In addition, the company repurchased 4.2 million shares in Q4 2021, valued at $0.5 billion.

The company offers attractive shareholder return programs which makes LyondellBasell Industries N.V. (NYSE:LYB) one of the good investment options in diversifying investors' portfolios. In the post-pandemic period, the company is optimistic about the recovering demand for both goods and services as stated in its outlook in its Q4 earnings report. As a result, BMO Capital analyst John McNulty lifted LyondellBasell Industries N.V.'s (NYSE:LYB) price target from $95 to $103 and maintained his Market Perform rating on the stock. McNulty believes that continued strong consumer spending in key end markets such as packaging, housing, and automobiles will benefit the Houston-based packaging company.

35 elite funds held stakes in LyondellBasell Industries N.V. (NYSE:LYB) at the end of the fourth quarter of 2021, compared to 39 in the previous quarter. Eagle Capital Management, led by Boykin Curry, owns the most shares in LyondellBasell Industries N.V. (NYSE:LYB), with a total holding of $282 million.

Here is what Miller Howard Investments has to say about LyondellBasell Industries N.V. (NYSE:LYB) in its Q3 2021 investor letter:

“We initiated a position in LyondellBasell (LYB). Chemical markets are currently robust given the combination of 2020 plant shutdowns and strongly recovering demand. Despite the tailwinds, Lyondell trades at a low valuation and yields just under 5%.”

7. Exxon Mobil Corporation (NYSE:XOM)

Dividend Yield as of March 21: 4.47%

Number of Hedge Fund Holders: 71

Oil giant Exxon Mobil Corporation (NYSE:XOM) is one of the oil companies profiting from the current geopolitical situation with shares jumping 6.26% in the last month, as of March 21. For the past 39 years, Exxon Mobil Corporation (NYSE:XOM) has increased its annual dividend payment to shareholders.

The Texas-based oil and gas producer released its Q4 earnings report in February with a net income of $8.9 billion or $2.08 EPS, beating estimates by $0.12. Exxon Mobil Corporation (NYSE:XOM) is also strengthening its balance sheet by repaying $9 billion in debt in the fourth quarter, bringing the total debt repayment to $20 billion in 2021. Exxon Mobil Corporation (NYSE:XOM) achieved record profitability in 2021, owing to strong oil and gas demand and an increase in commodity prices, which resulted in total revenue of $286 billion for the year.

According to Insider Monkey’s Q4 13F filings, 71 hedge funds held stakes in Exxon Mobil Corporation (NYSE:XOM) at the end of December 2021, for a total stake value of $5.39 billion, up from 64 funds in Q3 2021, for a total stake value of $4.64 billion.

6. Southern Copper Corporation (NYSE:SCCO)

Dividend Yield as of March 21: 5.38%

Number of Hedge Fund Holders: 19

Southern Copper Corporation (NYSE:SCCO), one of the largest copper producers in the world, offers a dividend yield of 5.38%. The company operates copper mining facilities in Peru, Argentina, Ecuador, Mexico, and Chile. In 2021, Southern Copper Corporation (NYSE:SCCO) produced 958,200 tons of copper, surpassing the full-year estimate by 1.6%. The Arizona-based miner expects to produce 922,000 tons of copper in 2022 and 1.8 million tons annually by the end of the decade.

Southern Copper Corporation's (NYSE:SCCO) fourth-quarter revenue increased 20.1% to $2.8 billion, and full-year sales grew 36.9% year over year to $10.9 billion, a record-high net sales. As of March 21, the stock delivered 34.2% returns to investors in the past three months.

Southern Copper Corporation (NYSE:SCCO) is one of the commodity stocks that hedge funds are keeping an eye on along with Vale S.A. (NYSE:VALE), Exxon Mobil Corporation (NYSE:XOM), and Rio Tinto Group (NYSE:RIO). According to Insider Monkey data, 19 hedge funds held a stake in Southern Copper Corporation (NYSE:SCCO) at the end of the fourth quarter of 2021, compared to 23 in the preceding quarter. Ken Fisher's Fisher Asset Management holds the largest stake in the copper mining company with a total stake of $222 million.

Click to continue reading and see the 5 Commodity Dividend Stocks With Over 4% Yield.

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Disclosure. None. 10 Commodity Dividend Stocks With Over 4% Yield is originally published on Insider Monkey.