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13 High-Yielding Commodities for 2013


Archer Daniels Midland, Deere & Company, and Exxon Mobil make the list.

As many individual investors have taken a cue from professional and institutional money managers, alternative investments have gone mainstream – and commodities lead the trend. Interest in this asset class has exploded as individual retail investors have discovered commodities' vast benefits, like low correlation to equities and bonds, inflation-fighting capabilities and their ability to profit from some of the world's fastest-growing emerging markets. These benefits have made funds like the PowerShares DB Commodity Index Tracking Fund (NYSERACA:DBC) popular holdings in many portfolios.

Yet for many investors, commodities are generally thought of as a growth element added for a capital gain component. The path to income often leads investors to other pastures. But what many do not realize is that commodity investing can be combined with the power of dividends as many seek out a steady income stream. From faster compounding of gains and providing downside protection in bear markets to simply providing a way to pay the monthly bills, dividends are surely as powerful as natural resources for an investment strategy.

Combining the two is advantageous for portfolios. Luckily, there are plenty of options for gaining dividend exposure inside the commodities patch. Below, we outline 13 commodity stocks with strong dividends to prepare your portfolio for 2013.

1. Archer Daniels Midland (NYSE:ADM)

Archer Daniels Midland is an agricultural giant. At its core, the company serves as the connection between raw crops and the various products derived from them in more than 75 countries. At its numerous processing plants, ADM converts raw corn, oilseeds, wheat and cocoa into products for food, animal feed, industrial, and energy uses. That includes protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients.

As the world's population continues to grow, so does demand for quality foods, feed ingredients for livestock, alternative fuels, and environmentally-friendly alternatives to traditional chemicals. As one of the world's leading agricultural processors, ADM plays a pivotal role in meeting all of these needs. As an income investment, it can't be beat. It has raised its dividend annually over the last 25 years and currently pays a 2.58% dividend.

2. BHP Billiton Limited (NYSE:BHP)

If investors wanted to buy a "one stop shop" for their commodities portfolios, it would have to be BHP Billiton (NYSE:BHP) (NYSE:BBL). The natural resource giant has its hands in everything from iron ore and coal to oil assets and diamond mining. Founded in 1860, BHP Billiton has grown to over 100 different fields and mine sand offices, and the company is quite global in scope. That worldliness provides plenty of dividend firepower as well.

As for the two tickers – the firm was created from the merger of BHP Limited (an Australian listed company) and Billiton Plc (a UK listed company). The merger was effected by way of a dual listed companies (DLC) structure. That means that although the companies technically continue to be separate legal entities, they are managed and run as a single economic entity. BHP currently yields 2.69% and BBL yields 3.04%. The yield difference lies in how the vehicles are subject to foreign withholding tax.
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