Add some stability to your portfolio as the market appears stretched
In the age of meme trades and rampant speculation, income
stocks don’t exactly get the juices flowing. Generally defined as equity units
of publicly traded companies that feature consistent (and hopefully rising)
dividend payouts, we should be honest and admit that this investment class
isn’t exactly sexy. But it’s also one of the more important sectors to consider
given the present context.
For one thing, income stocks provide a strong measure of
stability. As you know, one of the hottest sectors over the trailing year has
been cryptocurrencies. When things are going well, you’re on top of the world.
When they’re not, you want to find the deepest hole so you can crawl into it.
With companies that pay dividends, though, you can always rely on something
even when the market doesn’t go your way.
Second, the biggest threat to the equities sector and the
economy could be deflation, which would favor income stocks over growth names.
Now, I understand the social media chatter that scream incredulity when this
topic comes out. I look at it this way. If inflation was the paradigm-shifting
threat that we should worry about, then how come the Dow Jones Industrial
Average has been flat to negative since early May?
Even more telling, why is the gold price down during the
same period? Surely, in an inflationary environment, hard assets of intrinsic
value should soar to the moon. Even if we don’t have inflation now, just the
concept of professional investors anticipating it — and by the way, seemingly
everybody is talking about inflation — should result in higher gold prices. If
anything, we’re seeing lower prices, which should make you think about income stocks.
And that’s the point. Nobody has a crystal ball on this
stuff, so you don’t want to swing for the fences toward any one narrative. But
when everyone bets on the same horse, the possibility of great disappointment
rises. Therefore, here are some income stocks to consider:
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