Three Safe Trades to Ride Out the Storm

Mar 7, 2023

Markets are a volatile mess.

All thanks to the Federal Reserve, which just said interest rates could head higher than expected. “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Fed boss Jerome Powell said, as quoted by CNBC, “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

That tells us two things. One, the peak level of the federal funds rate will be higher than prior indications. Two, the smaller quarter point hikes will be short-lived.

With that being said, investors may want to look at dividends, for example. After all, companies with strong cash flows and attractive yields tend to outperform even the worst of markets. So, if you are looking for reliable income, here are some solid yielders.

Also, according to The Wall Street Journal: “Dividend stocks have become the new darling on Wall Street, and investors looking for income are pouring billions of dollars into them. These securities are considered a good buffer during times of market volatility. They also are seen as an inflation hedge, considering that S&P 500 dividend growth has outpaced inflation.”

Some stocks to consider include:

NextEra Energy (NEE)

Demand for utility services will always remain intact, even in the worst of times. Look at NextEra Energy, for example. For one, the company provides a basic need service –electricity. Two, since demand for electricity doesn’t a lot from one year to the next, the company is insulated. Three, the company carries a dividend yield of 2.55%.

Coca-Cola (KO)

With strong demand, dependable dividends, and incredible earnings growth, Coca-Cola may be one of the best stocks to consider, long-term. Buffett, who drinks about five cans of Coke a day, agrees, once calling KO a “forever” stock. Coca-Cola is also a dividend king, raising its dividend for the last 60+ years. It has a current yield of 3.07%.

Even better, the total addressable market for non-alcoholic drinks is estimated to be worth $833.1 billion at the moment. From here, it could grow at a CAGR of 5.6% through 2030. Coca-Cola is likely to take a big part in that growth.

Enbridge (ENB)

With a dividend yield of 6.94%, Enbridge is a lower risk, high yield opportunity that should keep your portfolio safe from chaos. The company has a wide moat portfolio, including the second longest natural gas pipeline in the U.S., North America’s longest crude oil pipeline, and a high-growth renewable power generation business.

Even better, the company just boosted its quarterly dividend to $0.8875 per share. It’s payable on March 1 to shareholders of record as of Feb. 15, 2023. Moving forward, Enbridge reiterated its 2022 full-year revenue guidance for adjusted EBITDA of $15 billion to $15.6 billion.
It also announced 2023 EBITDA guidance of $15.9 billion to $16.5 billion. In short, Enbridge should have quite a year in 2023.

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