Is This Why Harmeet Dhillon Fell Short in the RNC Chair Race?
Photos: Aftermath of Looting in Memphis
Hidden Cameras In “Racist” America
What McDaniel’s Re-Election as RNC Chair Means
A Quick Bible Study, Vol. 150: The 10 Commandments Are Not the 10...
Biden Makes Several False Claims During Speech On America's Economy
Kevin McCarthy Plans to Meet With Biden to Discuss the Debt Limit
Weaponization Committee Is Already Laying Groundwork for Investigations Into the FBI and D...
DeSantis Advisors Are Reportedly Preparing For His 2024 Presidential Announcement
Trump Speaks Out Against the Murder of Tyre Nichols
The Christian's Duty to Stand for Life
More Than a Motto — the Fight Between Truth and Modern-Day Values
Palestinian Arab Terrorists Violate the Sanctity of Shabbat and Murder Seven in Jerusalem
How Do You Prosecute Trump and Not Biden (and Clinton)?
How Much of a Christian Nationalist Are You? Take This Simple Test.
OPINION

7 Commodity Stocks Yielding up to 10%

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

Investors have been wisely diversifying their portfolios to provide exposure to more than just U.S. stocks. Whether it's emerging markets, real estate or gold bullion, a broad-based approach provides for a better night's sleep.

Yet it's fair to ask: Do commodities also have a place in your portfolio? After all, they seem to rise and fall with alacrity, and investors often only notice them after they've made sharp gains or plunges. Truth is, we have no crystal ball that tells us how this group will fare in 2013. We can look at the supply and demand backdrop for various commodities, but much hinges on the health of global economies.

Yet if you look beyond 2013, then you can be assured that each commodity will have its day in the sun. The key to is to buy various commodities (or the stocks that represent them) when they are out of favor, but must also be nimble enough to sell them when they have posted major gains.

Here's what we do know: There are a number of dominant commodity producers currently sporting impressive dividend yields. And such high yields can support an underlying stock price if the going gets tough.

Here are 7 commodity-focused stocks with currently impressive dividend yields.

One of the intriguing aspects of super high-yielders is trying to identify what effect a future dividend cut may have on the stock. In mid-November, I took a look at NuStar Energy (NYSE: NS) and noted that if the dividend wasn't going to be as sharply cut as some had feared, then shares might post a quick rebound.
 
Since then, shares have rebounded more than 20%, "driven by a relief rally related to an allaying of concerns around the sustainability of NS' current distribution," noted analysts at Merrill Lynch. In effect, investors have captured a solid dividend yield and some quick capital appreciation.

Risks to Consider: A sharply weaker global economy in 2013 would negatively affect commodity prices -- and these firms' payouts.

Action to Take --> The best way to play these super high-yielders is to take the long view. The high yields suggest that near-term business conditions remain tough, but if history is any guide, then these stocks will zoom back into favor when the commodity cycle turns. By then of course, the resulting upward move in the share prices means you'll no longer be able to lock in such attractive yields.

P.S. -- The abundance of natural gas in the United States could lead to a third industrial revolution. One analyst is predicting a stock could rise 1,566%. Another stock has already jumped more than 1,000% and is expected to keep going. To learn more about investing in the natural gas boom, click here.

David Sterman does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.
This article orginally appeared at StreetAuthority.com

Join the conversation as a VIP Member

Recommended

Trending on Townhall Video