In the current environment, there are many investors who are seeking out dividend-paying stocks to be core holdings within their portfolios as a way to both reduce overall volatility and enhance yield. Many investors are attracted to dividend-paying stocks since dividend payouts are often a sign that the stock is a healthy investment. Additionally, dividends are a way for investors to increase their overall profit made by investing. Dividend stocks allow investors to continue earning money, even if the stock price declines slightly . At the same time, many investors are bullish on commodity prices, recognizing that long-term demographic trends are positioned to provide support to natural resource prices. Investing in commodities can be very attractive for investors; their investment is protected against inflation since commodity prices usually increase with inflation. Adding a commodity stock also creates a diversified portfolio, which many investors consider to be a successful strategy. Furthermore, commodities can be attractive due to the increase in demand created by emerging markets .
Below, we profile three ETFs positioned where these trends intersect, offering exposure to dividend-paying stocks with a general focus on commodity industries.
1. WisdomTree Global Natural Resources (GNAT)
This index measures the performance of natural resources companies that pay dividends. GNAT focuses on companies in the oil and gas, basic materials, metal and mining, and agriculture industries. There are 100 companies in the index, which are weighted based on their dividend yields. This ETF currently has a dividend yield of 5.98%.
2. WisdomTree Commodity Country Equity (CCXE)
This index measures the performance of companies paying dividends in commodity countries that are selected from the WisdomTree Global Dividend Index. The price and yield corresponds directly with the WisdomTree International Basic Materials Sector Index, which focuses on companies specializing in metals and mining, chemicals, construction materials, and paper and forest products. Countries included in the index are Australia, Brazil, Canada, Chile, New Zealand, Norway, Russia and South Africa. This ETF has a current dividend yield of 3.45%.
3. ABC High Dividend ETF (ABCS)
This ETF tracks the BNY Mellon index. ABCS is a rules based benchmark comprised of 30 securities, including common stocks and U.S. exchanged-listed Americandepositoryreceipts of companies from Australia and Brazil, as well as locally listed companies in Australia and Canada. The index is made up of the top 10 stocks or ADRs with the highest dividend yield in each country. This ETF has a dividend yield of 5.06% .
Dividend stocks and commodity stocks can be a great combination. If the right stock is chosen, an investor could reap the benefits of a healthy dividend payment, and well as a rising commodity stock price. The ETFs listed above are examples of three high-yielding commodity stocks that may appeal to investors. If a particular commodity is doing well, many investors will find stocks in that industry to be good investments. Additionally, dividend-paying stocks attract investors since they often appear to be stable in the market.
Disclosure: No positions at time of writing.