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Which 5 Commodity Megacaps Deliver Juicy Dividend Yields?

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A number of investors have stopped looking for growth, and have taken cover in value funds that pay out annual yields in a time when no returns are guaranteed.

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As the years have progressed, commodity exposure has evolved from a binary factor -- either you have it or you don't -- to a necessary component of every portfolio. But as markets have been continually beaten down as of late, finding the right commodity allocation has been something of a difficult task for many investors. A number of investors have stopped looking for growth, and taken cover in value funds that pay out annual yields in a time when no returns are guaranteed.

Dividend payments are a crucial element to investing, as they not only provide inflation hedges and steady income, but they also point to a company that is healthy. Typically only a strong company is able to pay out cold hard cash to its investors, where as a non-dividend company has an easier time cooking its books to make everything appear business as usual. Below, we outline five of the largest commodity dividend payers in the world allowing investors to add a healthy income stream to their portfolio while maintaining critical exposure to hard assets.

Exxon Mobil (XOM)

Exxon Mobile is an obvious choice and likely a holding of many commodity investors. Exxon is one of the biggest companies in the world and it has a dominant position in the oil & gas industry. The stock has a current market cap of just under $400 billion and trades just over 18 million times per day. Better yet, Exxon Mobil's current P/E ratio is sitting at just over 10, leaving it undervalued by the standards of many investors. As for dividend yields, the 2.7% payout from this stock is not the highest of the Aristocrats, but it is certainly a nice bump to your portfolio.

Quick Stats (as of 7/26/2012)
  • P/E Ratio: 10.4
  • Dividend Yield: 2.67%
  • Payout Ratio: 23%
  • Last Dividend Payout: 6/11/2012
Chevron Corporation (CVX)

As one of the largest oil producers in the US, Chevron may already have a place in your portfolio. The stock has a hefty market cap of $213 billion and trades nearly seven million times per day. The company is split into two segments of operation: upstream and downstream. The upstream portion focuses on the discovery and extraction of crude oil and natural gas while the downstream segment refines and markets the fossil fuels. It should be noted that Chevron's current P/E ratio of just 7.9 leaves it undervalued by the standards of many investors, making it a good time to buy for those who fall under that camp. Last but certainly not least, Chevron has a current dividend yield of 3.4% for its shareholders.

Quick Stats (as of 7/26/2012)
  • P/E Ratio: 7.9
  • Dividend Yield: 3.39%
  • Payout Ratio: 23%
  • Last Dividend Payout: 6/11/2012
BHP Biliton (BHP)

Though a number of specific metals have their own respective sectors, when it comes to general metals mining, few companies have the clout that BHP Billiton has amassed. The company has a massive market cap of $165 billion, making it one of the largest companies in the world. BHP is responsible for mining a vast amount of metals including copper, gold, lead, zinc, iron ore, manganese, coal, aluminum, and others. The company has headquarters in both London and Australia while paying out a dividend yield of 3.2%, creating a good large cap value play for risk-averse investors.

Quick Stats (as of 7/26/2012)
  • P/E Ratio: 7.6
  • Dividend Yield: 3.19%
  • Payout Ratio: 21%
  • Last Dividend Payout: 3/22/2012
British Petroleum (BP)

BP is a well-known oil and gas producer throughout the world. Unfortunately, many people still associate the company with the Deepwater Horizon Spill, the most costly of its kind in the US, which destroyed the stock price. Currently, the stock is still a long ways off of its pre-spill highs and is sitting at a P/E ratio of 5.2, what many would consider to be undervalued. The company has a current market cap of $125 billion and is in fact, still dealing with the massive costs of that 2010 spill. On the upside, BP's dividend yield of 4.8% is a hard one to top, making it one of the most attractive options on this list.

Quick Stats (as of 7/26/2012)
  • P/E Ratio: 5.4
  • Dividend Yield: 4.81%
  • Payout Ratio: 23%
  • Last Dividend Payout: 6/27/2012
Rio Tinto (RIO)

Another dominant global miner, Rio Tinto has a healthy market cap of $80 billion and trades over 3.5 million times each day. Rio Tinto focuses a fair amount of its efforts on the metals industry, producing bauxite, alumina, and aluminum; copper, gold, molybdenum, silver, and nickel. The company also is a well-known name for other minerals like diamonds and salt. Founded in 1873, Rio Tinto currently operates in six different continents with a bit of a tilt towards the resource-rich Australia. The stock is currently offering a healthy dividend yield, paying out 3.4% to its shareholders.

Quick Stats (as of 7/26/2012)
  • P/E Ratio: 14.7
  • Dividend Yield: 3.36%
  • Payout Ratio: 39%
  • Last Dividend Payout: 4/12/2012
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Editor's note: This article by Jared Cummans was originally published on Commodity HQ.
No positions in stocks mentioned.
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