2 Non-Oil Commodity Stocks to Own

We often think of oil when we hear about commodity stocks. Fortunately, there are other options, including these two non-oil commodity stocks.

| More on:

Volatility continues to be an issue for many investors. Oil prices continue to soar, taking the entire economy for a ride. Inflation is at its highest point in decades. Interest rates are rising quickly. In short, the time has never been better to look at diversifying in a few non-oil commodity stocks.

Wait … did I just say non-oil commodity stocks? Isn’t oil surging?

Yes, oil prices are well into the stratosphere. By extension, they’re also taking big oil stocks, which are awash in cash, along for the ride. In some cases, those stocks are up by 20%, 30%, or even 50% this year.

But what happens when the factors causing oil to spike are finally resolved and oil prices retreat from their unsustainable levels?

Fortunately, the market provides us with several excellent non-oil commodity stocks to consider buying now.

Here’s something different to consider

Nutrien (TSX:NTR)(NYSE:NTR) is the first non-oil commodity stock to consider. For those that are unaware, Nutrien is the largest crop input provider on the planet. The company produces and then distributes products such as potash, nitrogen, and phosphates.

When the crisis in Ukraine started earlier this year, the global market for potash shifted. (Both Russia and Belarus account for nearly 40% of the global supply of potash.) This led Nutrien to ramp up production to meet that demand. This pushed Nutrien’s stock price to new highs, reaching $147 in April.

Since then, Nutrien’s stock price has retreated well over 20%. Incredibly, despite the dip, this non-oil commodity stock is still trading up over 15% year to date.

But does this make Nutrien a buy? There are actually a few reasons why the answer to that is yes.

Nutrien is a market leader in providing crop inputs. Not only are we now entering the key growing season, but the global factors that pushed the stock higher remain issues today. In other words, expect Nutrien to keep delivering positive results.

Speaking of which, in the most recent quarterly update Nutrien posted record net earnings of US$1.385 billion. On a per-share basis, that worked to US$2.39 per diluted share. By way of comparison, in the same period last year, Nutrien earned $133 million.

Nutrien also offers investors a tasty quarterly dividend, which currently boasts a yield of 2.19%.

This stock is as good as gold

The volatility we’ve witnessed in recent weeks often causes weary investors to turn to traditionally safer stocks. And in times of volatility, those safe stocks are usually precious metals such as gold.

Unfortunately, gold stocks, particularly traditional mining stocks, come with their own risks. This is where the appeal of another non-oil commodity stock comes into play.

Wheaton Precious Metals (TSX:WPM)(NYSE:WPM) is a precious metal streamer. Streamers don’t own any mines. Instead, they provide upfront capital to traditional miners to begin operations. In exchange for that upfront injection, the streamer is permitted to buy some of the metals produced by the mine at a highly discounted rate.

Those metals can then be sold at the current market rate, resulting in a handsome profit.

The business model allows the streamer to diversify quickly without risk to a large number of mines. In the case of Wheaton, the company boasts a portfolio of 23 operational mines on three different continents. Wheaton also has a further 13 streams at various points in the development pipeline.

A further element of diversification comes in the form of the types of metal produced by the mine. Wheaton’s existing streaming agreement includes not only gold but also silver, palladium, and cobalt, too.

Finally, let’s talk about income. Wheaton offers investors a respectable quarterly dividend with a yield of 1.42%. That may not be one of the highest returns on the market, but it is diversified and well covered.

Non-oil commodity stocks can be great investments

In my opinion, both Nutrien and Wheaton are great long-term investments. Both would do well as part of a larger, well-diversified portfolio. Apart from offering growth and income potential, both stocks have some defensive appeal as well.

In other words, buy them, hold them, and watch them grow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien Ltd.

More on Investing

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »

Rocket lift off through the clouds
Investing

2 Small-Cap Stocks That Canadians Should Consider in November

Small-cap stocks can have explosive upside. However, you need to be very choosey. Here are two small cap Canadian stocks…

Read more »

Middle aged man drinks coffee
Stock Market

Top Canadian Stocks You Can Buy Now With Just $1,000

Undervalued Canadian stocks such as Lassonde and Jamieson Wellness trade at a sizeable discount to consensus price target estimates.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

money goes up and down in balance
Investing

Unveiled: 2 Must-Watch Stocks for Your TFSA Before 2025

Value-conscious TFSA investors should consider Bank of Nova Scotia (TSX:BNS) and another great dividend pick.

Read more »