Real Raw Materials, Real Big Dividends
Despite a nice rally in September to end the third quarter, many investors are still on edge and looking warily at the last few months of the year. Will holiday shopping continue to suffer? Will we see poor Q3 and Q4 earnings as easier year-over-year comparisons fade? Can the rally last? Amid this lingering market uncertainty, many investors are seeking out commodity and materials stocks — that is, companies that deal in hard assets and physical materials. Other investors are seeking out high dividend stocks because of their guaranteed paydays even if equity prices move sideways for a while. To help you get the best of both worlds, here’s a list of nine high-yield commodity and materials stocks for your portfolio. These stable suppliers have real value and low risk because they deal in tangible products used as raw materials — and will pay you back no matter what the market does via quarterly paydays north of 3%. |
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#1 – Commercial Metals Company
Market Cap: $1.7 billion Dividend Yield: 3.3% Commercial Metals Company (NYSE: CMC) recycles, manufactures, fabricates and distributes steel and metal products internationally. CMC stock is down slightly with a 6.7% return year-to-date, but the company has been paying a quarterly dividend of $0.12. Commercial Metals is set to reward shareholders with another dividend payment on Oct. 15. As a “green” company involved in recycling and a metals stock that feeds manufacturing, CMC will benefit from any increase in industrial production. |
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#2 – Du Pont
Market Cap: $40.6 billion Dividend Yield: 3.7% E.I. du Pont (NYSE: DD) offers its diverse product line to the agriculture, food, building, construction, electronics, communications and transportation markets. Since January, the stock has climbed an impressive 33.1%, and DD is up 37.8% over the past 52 weeks. DD also paid a quarterly dividend of $0.41 on Sept. 10 to shareholders of record on Aug. 13. Since Du Pont makes a variety of chemicals and materials for all manner of businesses, it is diverse enough to weather what the market throws its way. |
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#3 – Huntsman Corp.
Market Cap: $2.8 billion Dividend Yield: 3.4% Based in Salt Lake City, Huntsman Corp. (NYSE: HUN) manufactures both organic and inorganic chemical products. Like Du Pont, this chemical provider has its fingers in many pies and that diversification has paid off. Over the past 12 months the stock has jumped 24.52%, compared to gains by the Dow Jones Industrial Average and S&P 500 of 11.5% and 8.2%, respectively. Stockholders also get a nice 3.4% yield on top of that. |
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#4 – MeadWestvaco
Market Cap: $4.2 billion Dividend Yield: 3.8% MeadWestvaco Corp. (NYSE: MWV) provides packaging solutions to numerous and varied industries, including healthcare, food and tobacco, among others. Since October 2009, MWV’s stock has increased 5.2%. The Virginia-based company has paid a dividend since 1892, its last $0.23 payment coming on Sept. 1. The stock has been pretty flat lately, but any increase in economic activity will call for an increase in packaging to ship finished goods — a boon for MWV stock. |
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#5 – Nucor
Market Cap: $12.1 billion Dividend Yield: 3.8% Nucor Corp. (NYSE: NUE) manufactures steel and steel products. Despite outperforming earnings estimates for four consecutive quarters, NUE stock has dropped 17.8% year-to-date. Fortunately for shareholders, Nucor will dole out a $0.36 dividend on Nov. 11 as part of its 3.8% annualized yield. This is a more aggressive play for those who think manufacturing has bottomed and that metals companies such as Nucor will ride the recovery. In the meantime, the 3.8% yield is good for peace of mind. |
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#6 – Olin Corp.
Market Cap: $1.6 billion Dividend Yield: 3.9% Headquartered in Missouri, Olin Corp. (NYSE: OLN) is broken into two separate product segments: chlorine and chemical products, as well as sporting and military ammunition. Over the past 10 months, OLN stock has gained 16.1%, compared to lesser gains by the broader markets. Additionally, pays a dividend yield of almost 4%. This diversified chemical company is a good low-risk dividend investment. |
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#7 – Sonoco
Market Cap: $3.4 billion Dividend Yield: 3.3% No, not the gas station with a very similar name — based in South Carolina, Sonoco Products Co. (NYSE: SON) manufactures industrial and consumer packaging products. Shareholders are pleased with the 16% returns the stock has shown since January. SON pays a dividend yield of about 3.3%, and like MeadWestvaco is a great play to benefit from the prospect of a recovery. And with returns that have doubled the broader market YTD, Sonoco doesn’t seem to be suffering in the short term. |
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#8 – Southern Copper
Market Cap: $29.9 billion Dividend Yield: 4.2% Southern Copper (NYSE: SCCO) is a producer of copper, molybdenum, zinc and silver. While the company’s dividend payment dropped eight cents last quarter, it still pays a hefty yield of 4.2%. Thanks to a September rally, the stock has gained 6.7% year-to-date — and could mean a dividend raise in the coming quarters. The diverse metals operations of SCCO will allow this commodity stock to stay stable in the short term but also participate in any meaningful recovery. |
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#9 – Terra Nitrogen
Market Cap: $1.8 billion Dividend Yield: 9.6% Terra Nitrogen Co. (NYSE: TNH) is a producer and distributor of nitrogen fertilizer products. While the stock may have dropped 5.7% since January, it does pay the highest dividend yield on this list at nearly 10%. Agricultural commodities such as wheat and soy remain in high demand, and that means fertilizer products are also in demand to boost crop yields. That makes TNH a great low-risk dividend play right now. |
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