SU:CC - Get Paid to Wait: 2 Top Commodity Dividend Stocks to Ride Out 2023
It’s hard to be an investor these days, with so much damage being dealt to firms that probably don’t deserve to sink so quickly. Undoubtedly, dip buying has become an unprofitable (even painful) endeavour over the past year or so. Just because many other investors are ready to give up doesn’t mean you should follow suit. Indeed, it’s times like these, when nobody expects anything but losses, when quick and sizeable gains could hit stocks from out of nowhere.
Indeed, there aren’t many catalysts to look forward to next year. But with such oversold conditions, sometimes there doesn’t have to be any reason for stock valuations to creep higher. Indeed, speculation over a Fed pivot or pause has been driving short-lived rallies amid this bear market. Though bear markets tend to hold many failed bounces, only to punish dip buyers with lower lows in the months ahead, it only takes one sustainable rally to power the next bull market.
Many pundits would agree that 2023 is very likely to hold an economic downturn. Does that mean further market losses are to be expected? There are no guarantees, especially if the market has already priced in a hard landing. With bullish analysts and strategists becoming fewer and farther between, I think conditions are becoming too gloomy .
Though a market bottom will be impossible to time, I think a dollar-cost averaging approach could prove wise for those who are enticed by market bargains, but are not yet ready to commit to a sizeable position.
In this piece, we’ll check out two commodity stocks that may be less correlated with broader markets moving forward. Consider gold miner Agnico Eagle Mines ( TSX:AEM ) and integrated energy company Suncor Energy ( TSX:SU ) for less-correlated returns in 2023.
Agnico Eagle Mines
Agnico Eagle Mines stock has already suffered a more than 50% crash on the back of weak gold prices. Indeed, gold has not done a great job of delivering amid inflation, recessionary pressures, and geopolitical turmoil. Though many young investors have already given up on the shiny yellow metal, I think now is a great time to take on a contrarian stance with one of the most bountiful gold miners on the TSX Index.
With a 3.56% dividend yield, Agnico Eagle is a great way to get paid to wait for gold to shine again. Like markets, nobody knows where gold will go next. There are too many factors that influence commodity prices. Still, after a bear market plunge, valuations seem to be incredibly depressed. For a well-run miner with a literal gold mine of assets following the Kirkland Lake merger, I’d look for AEM stock to go from dog to surprising outperformer in the new year.
Even if gold can’t pick up traction, the dividend seems well covered.
Suncor Energy
With energy prices stabilizing, Suncor Energy seems like a top value pick for seekers of less-correlated passive income and gains in a recession year. The stock trades at 7.4 times trailing price-to-earnings (P/E), with a 3.95% dividend yield. Like Agnico Eagle, Suncor will pay investors with a growing dividend for their patience.
Recently, Suncor put in place new protocols to improve upon safety at oil sand sites. Indeed, pressure from activist investors has likely caused Suncor to take steps to better itself amid industry tailwinds.
Going into 2023, energy prices could remain incredibly volatile. Still, given how much high energy prices have influenced inflation, I’d argue it’s only prudent to have some energy exposure to hedge against inflation.
The post Get Paid to Wait: 2 Top Commodity Dividend Stocks to Ride Out 2023 appeared first on The Motley Fool Canada .
Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2022