High Yielding Commodities: Beyond Energy (GDXJ, SCCO, PCL)
Jared Cummans: In a low rate and relatively uncertain economic environment, dividend yields have been the saving grace of many portfolios. A steady stream of income goes a long way, especially when markets are rocky, as they have been for the latter part of this year. But one problem that many commodity investors face is combining crucial exposure to the hard assets segment while still finding palpable yields [for more commodity dividend news and analysis subscribe to our free newsletter].
Most often, investors are funneled into the energy industry, where oil & gas companies and MLPs have been known to provide handsome dividends. This trend, however, is not ideal for portfolio diversification, as many look to move their assets beyond just the energy world and get a broader exposure to the commodity space. For those seeking the comfort of a stable yield but who wish to look beyond the standard choices, we outline three commodity investments to help juice your portfolio.
- Plum Creek Timber (NYSE:PCL): This REIT manages timberland in the United States and is one of the largest private landowners in the country. The stock has a market cap of about $6.8 billion and trades more than 900,000 shares each day. Better yet, timber is one of the most compelling commodity investments, as it has a strong historical performance compared to other financial assets. The stock is currently backed by a handsome yield of 4% for its shareholders.
- Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ): Gold miners have been relatively volatile in the past few years, but for those who can handle their unpredictable nature, these assets can offer some enticing yields. This ETF, which has more than $2.8 billion in total assets, invests in a basket of small cap gold miners to give investors broad exposure through a single ticker. The fund trades more than 2.8 million shares per day and is currently yielding upwards of 5%.
- Southern Copper (NYSE:SCCO): This copper mining giant is based in Phoenix, but has its hands in mines all around the world. With a market cap topping $30 billion, SCCO is by far the largest security on this list. The stock currently has a healthy EPS of $2.3 and a P/E ratio sitting at just over 15. Best of all, it comes with a monster yield, as it is currently paying out around 10.2%.
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