Two years ago, I published a list of “Our Three Favorite High-Yielders for 2021.” The trio I selected – Altria (NYSE: MO), Iron Mountain (NYSE: IRM), and Enterprise Products Partners (NYSE: EPD) – went on to produce a 44% average total return (share price appreciation plus dividends paid) in 2021.

Over the same span, the SPDR S&P 500 ETF (SPY) generated a total return of 29%. While I expected my group of income stocks to do well, I did not expect them to outperform the overall stock market by 15 percentage points. On Wall Street, that type of result will earn an analyst a seven-figure bonus!

So, it was with more than a little trepidation that I set out on the same task last year. I said at that time, “I don’t know if this year’s group can match that, but I’ll give it a try.” And give it a try I did.

I am proud to report that last year’s trio performed even better than the previous year’s group relative to the overall stock market. While the SPY lost 18% in 2022, “Our Three Favorite High Yielders for 2022” returned an average of 16% to beat the index by 34 percentage points!

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That type of outperformance is rare, especially during a year when the stock market is in contraction. But in this case, I got it right due in large part to the commodity-driven nature of the three businesses below.

Caterpillar

I felt so confident that heavy equipment manufacturer Caterpillar (NYSE: CAT) would do well last year that I also made it my contribution to “Our Best Picks for 2022” for my Personal Finance readers. I felt strongly that Caterpillar would be the direct beneficiary of the infrastructure spending bill passed in late 2021.

I also believed that oil drillers and miners, two of Caterpillar’s primary customer groups, would be flush with cash in 2022 and would use that money to buy more equipment. Both of those hunches proved correct, and CAT ended the year with an 18.6% gain.

BHP

I must admit that I did not foresee a massive jump in prices last year for the raw materials produced by Australian miner BHP Group (NYSE: BHP). However, I also did not anticipate that a war in Ukraine and a COVID flare-up in China would disrupt the flow of those materials throughout the global economy.

Fortunately for BHP, demand for its copper, iron ore, coal held strong throughout the year. In fact, BHP generated so much cash flow that it paid out a special dividend to its shareholders that pushed its total return for 2022 to 23.1%.

Enbridge

I don’t know if anyone was seriously expecting Russia to invade Ukraine at the start of last year. But two months later, the Russian army was on the move as was the price of oil. The result was record high gasoline prices last summer which benefited energy infrastructure provider Enbridge (NYSE: ENB).

As a “midstream” operator, Enbridge does not directly benefit from higher oil and natural gas prices. But since it provides transportation and storage services for the companies that do profit from higher energy prices, Enbridge was able to operate its distribution network at maximum capacity throughout the year, resulting in a 6.5% total return for its shareholders.

So, there you have it. Three stocks that all produced positive total returns during year that was brutal on the overall market. At the risk of sounding immodest, I am quite proud of that result.

At this point, I think I’d be better off quitting while I’m ahead. But that’s not my nature, so next week I’ll provide a new list of income stocks for 2023. I can’t promise that it will do as well as the previous lists, but I’ll give it my best shot!

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