4 High Yielding Resource Stocks to Buy: Cliffs Natural Resources Inc (CLF), Alliance Resource Partners, L.P. (ARLP)

After a year of weak stock returns and strong cash flow generation, natural resource mining stocks have joined the high yielding asset class. In the old days, natural resource stocks didn’t focus on paying dividends. Now investors can find a solid selection of high yielding resource stocks that yield in excess of the 2% offered by the 10-year treasury.

The following high yielding stocks include two limited partnerships that pay 90% of profits to shareholders and provide yields in excess of 6% and include a range from the mega-cap Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) to the mid-cap coal producer Alliance Resource Partners, L.P. (NASDAQ:ARLP). These stocks trade more volatile than a traditional high yielding utility or health care stock, but it most cases the stocks provide more growth opportunities than other counterparts in more conservative sectors.

Alliance Resource Partners, L.P.Mega-cap copper explorer

While investors are concerned that Freeport made a bad investment in buying McMoRan Exploration and Plains Exploration and moving into oil exploration, the stock now produces a solid 3.5% dividend. The well-known producer of copper and gold has a market cap of $34B and annual revenue sales approaching $22B prior to the merger. The stock is set up for potential capital gains after the merger related sell-off, but the dividend should remain solid with a strong balance sheet and cash flow from the copper operations.

Freeport operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold, and molybdenum. The portfolio of assets include the Grasberg minerals district in Indonesia, the Morenci minerals district in North America, the Cerro Verde and El Abra in South America, and the Tenke Fungurume minerals district in the DRC.

Volatile iron-ore miner

Cliffs Natural Resources Inc (NYSE:CLF) provides the unique opportunity to invest in a mid-cap iron-ore producer that provides a substantial 6.7% dividend yield at the current price. The stock has had a substantial sell-off since peaking around $95 in early 2011 providing for potential capital gains if the rebound in China demand continues.

The company is an international mining and natural resource play that is the largest producer of iron ore pellets in North America via the operation of six iron ore mines and two coking coal mine complexes. Cliffs also operates two iron ore mines in Western Australia and owns an interest in a coal mine in Queensland.

Underfollowed coal partnership

Alliance Resource Partners provides the unique investment in a domestic coal miner underfollowed by the market. The company has a dividend yield of 7%, yet the MLP continues to increase coal production while the market cuts back.

The company engages in the production and marketing of coal primarily to utilities and industrial users in the United States. It operates 11 underground mining complexes in the Illinois Basin, Central Appalachian, and Northern Appalachian regions.

Strong nitrogen partnership

Terra Nitrogen Company, L.P. (NYSE:TNH) with a market cap of around $4.5B is a strong dividend play on the list with a 6.8% yield. The marketer of nitrogen fertilizer used primarily to improve the yield and quality of crops saw significant gains from 2010 to early 2012. The stock currently trades near all-time highs and will continue to benefit from the growing demand for food in emerging markets.

The principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solutions (UAN), which are manufactured at the facility in Verdigris, Oklahoma.

1-Year Dividend Yield Chart

The below chart highlights the dividend yields of these four resource stocks. The yields have mostly remained steady over the last year as strong cash flows continue to lead to high yields.

ARLP Dividend Yield data by YCharts

Conclusion

Investors now have the unique opportunity to invest in quality resource stocks with solid dividend yields above 3%. Naturally the MLPs normally trade with less volatility due to the high yields, but all of the investment options provide solid yields depending on which commodity investors perceive has having a strong future.

The article 4 High Yielding Resource Stocks to Buy originally appeared on Fool.com and is written by Mark Holder.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!