Plenty of FTSE 100 and FTSE 250 stocks offer lucrative dividend yields at present. For investors like me, who like to build their passive income stream, this gives plenty of choice. Typically, I would like to diversify this income across sectors, just to be on the safe side.
However, there is one particular sector that stands out for me right now. That is commodities. Among commodities, I like three stocks for their own particular attributes.
#1. Evraz: continued positive outlook
The FTSE 100 miner and steel manufacturer Evraz (LSE: EVR) reported strong results for the first half of 2021 yesterday, amid an industrial metals’ boom. Its revenues are up 24% from the year before and its net profit has more than doubled, as has its free cash flow.
It also has a positive outlook for the rest of the year, even though it expects some decline in steel prices. Even otherwise, there are some concerns about that commodity boom. It is driven by government spending, which will wind down eventually and economic growth may or may not support commodities prices on its own. But that still remains to be seen. In the meantime, I reckon Evraz’s share price will stay relatively firm.
The miner’s share has been attractive for a while for its generous dividend payouts too. Over the past five years, its dividend yield has averaged a huge 10.8%. This year is turning out to be a good one too. It has already paid $0.5 in dividends this year, and is now going to pay another $0.55, which brings its dividend yield up to an eye-watering 12%!
#2. BP: improving economy
The upturn in oil prices this year has been a blessing for oil producers like BP, which saw a pretty poor 2020. The company is back in good health, its share price has risen fast since last November, and most importantly, it is back to paying dividends. Its dividend yield is around 5% right now, but I reckon that can improve further.
The economy is expected to gather pace over the rest of 2021 and this should continue to benefit BP. I expect its dividend yield to be higher by the end of the year, making it a winning buy. Over the long term, however, much will depend on its ability to pivot to green energy. But so far the signs look positive.
#3. Centamin: a more risk-averse choice
I think there is always a case for buying gold stocks, which can offer a safe haven in extreme situations. And Centamin is a healthy FTSE 250 gold mining stock, that offers a good proxy in my view, to holding actual gold. It also has a good dividend yield of 5%.
Moreover, its share price is widely expected to rise over the next year. There are some concerns regarding its financials, but in my view the odds are more in its favour than not.
