As the market begins to roll over, it becomes increasingly important to protect your portfolio. Of course, we advocate holding precious metals, like gold, that will hold their value in both inflationary and deflationary times – but some well positioned stocks should remain cornerstones of your portfolio as well. This type of company should boast a fundamentally stable business and a dividend stream to cushion investors in tough times, but also an element of growth that rewards investors in better times.
In the current market, some utility companies fit the bill. Withthe Obama Administration and the Federal Reserve pulling out all the stops to keep interest rates low, and many utility yields look attractive at current levels. Add in that a market pullback will likely initiate a flight to safety, and selected utilities could also offer substantial capital appreciation.
We don’t recommend going out and buying utilities at will, however, as all are certainly not created equal. Most will provide nice income streams, but the growth of that stream is largely tied to regulated rate increases. As we enter an exceptionally inflationary era, with interest rates rising (at some point), we point you towards those utilities that have an element of growth, so they can not only grow earnings – but grow their dividend payments as well, giving you a positive return in real terms.Read more...
