Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
We all know that commodities can hedge against the risk of inflation, but for dividend investors, forget about dividend income if you invest directly in commodities or derivative contracts like futures and options. However, if you invest in stocks of US commodity producers, it’s a different story. Many oil and gas companies, miners, and commodity traders in the US offer decent dividend yields, and can even provide returns from stock price appreciation.
Here are 7 dividend-paying commodity stocks in the US market:
Rio Tinto Group Rio Tinto Group (NYSE:RIO), the second-largest mining company globally after BHP Group, currently offers a dividend yield of 6.5%. The company’s main operations include aluminum, copper, and iron ore production, as well as lithium project development. Analysts at RBC Capital Markets highlight attractive free cash flow and dividend yield from Rio Tinto, along with a robust balance sheet.
Vale Vale (NYSE:VALE), the world’s largest iron ore producer and diversified mining company, leads the list with a high dividend yield of 11.9%. Vale produces iron ore, nickel, copper, cobalt, and other materials, diversifying its revenue sources to mitigate the negative impacts of commodity price fluctuations. For example, while nickel prices have fallen due to oversupply in Indonesia, copper prices have risen by around 8% over the past year.
When assessing quality dividend stocks, dividend growth is as crucial as high dividend yields. Archer-Daniels Midland Co (NYSE:ADM), a global agricultural commodities trading company, offers a dividend yield of 3.3% and has increased its dividend for 52 consecutive years, making it a dividend aristocrat (at least 25 consecutive years of dividend increases). ADM is also the sixth-largest holding in the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).
Exxon Mobil Exxon Mobil (NYSE:XOM), a major oil and gas producer, is the second-largest holding in NOBL, with a dividend yield of 3.2% and a track record of 41 consecutive years of dividend increases. Exxon Mobil holds low-cost assets in the Permian Basin and significant growth opportunities in Guyana. The company’s scale and integrated refining and petrochemical assets provide sustainable competitive advantages.
Pioneer Natural Resources Co (NYSE:PXD), an oil and gas exploration and production company currently in the process of being acquired by Exxon, offers a dividend yield of 4.1%. Analysts at Canaccord Genuity raised the stock’s 12-month target price to $282 from $230, rating it as “sector perform”. Pioneer is expected to report a year-over-year profit decline later this month but anticipates a 16% revenue growth. In the past four quarters, Pioneer exceeded earnings expectations in three quarters.
National Fuel Gas Co (NYSE:NFG) operates natural gas assets across four business segments: Exploration & Production, Pipeline & Storage, Gathering, and Utility. With a very low price-to-earnings ratio, the company recently announced a share repurchase program not exceeding $2 billion. National Fuel Gas has increased dividends for 54 consecutive years, currently offering a dividend yield of 3.8%.
Suncor Energy (TSX:SU) (NYSE:SU), a Canadian energy company, primarily operates in oil sands and offshore oil operations, as well as refining operations in Canada and the US. Additionally, the company has its retail and wholesale distribution networks, along with related energy trading activities. In the upcoming quarters, Suncor Energy is likely to issue special dividends or increase share repurchase authorizations. The stock currently offers a dividend yield of 4.2%.
