Utilities

Con Edison is one of the largest investor-owned energy companies in the United States
stockelements/Shutterstock

Utilities tend to have the ability to withstand any type of economic shock.

Whether boom or bust, people will still need to heat their homes in the winter and turn the lights on at night.

The business also has high barriers to entry.

It’s extremely costly to build the infrastructure required to distribute gas, water, or electricity. Plus the industry is highly regulated by the government.

As a result, utility companies usually operate as monopolies or oligopolies in their respective operating regions.

And due to the recurring nature of the business, the sector is known for providing reliable dividends to shareholders.

The best part? Utility companies like Consolidated Edison, American Water Works, and NextEra Energy have been increasing dividends year after year.

And these days, you can use spare pennies to gain access to those quarterly income checks.

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Technology

Apple store in downtown at TKL.
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Technology is a volatile sector, but it’s also at the top of the list when it comes to growth — something your portfolio needs when trying to battle against stagflation.

Even already established mega-cap tech companies are delivering faster growth rates than most other sectors.

For instance, Apple reported $81.4 billion of revenue for the June quarter, representing a 36% increase year over year. Microsoft earned $46.2 billion on the top line, up 21% from the year-ago period. And Amazon’s revenue surged 27% year-over-year in Q2 to $113.1 billion.

Of course, these fast-growing mega-cap tech plays have been highly sought-after for years.

Amazon, for instance, trades at over $3,300 a piece. But you don’t have to buy a full share of Amazon. Popular investing apps allow you to build a diversified tech portfolio using “slices of shares” with as much money as you’re willing to spend.

Food

Kroger is an American retailing grocer founded by Bernard Kroger in 1883 in Cincinnati, Ohio.
Eric Glenn/Shutterstock

Finally, we have the food industry, which includes grocery stores, food distribution companies, and food producers.

No matter where we are in the economic cycle, people still need to eat.

Case in point: While the COVID-19 pandemic has presented serious challenges for numerous businesses, supermarket giant Kroger has continued to thrive.

Kroger shares have returned more than 20% over the past 12 months.

Then there’s Pepsico, which has 23 brands that each generate more than $1 billion in estimated annual retail sales. Sure, inflation could drive up costs, but management plans to take “good, strong price increases” to counteract those pressures.

In the food industry, higher costs are usually passed on to consumers.

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Build a smarter portfolio

Investing in this rapidly changing world can seem daunting.

Not everyone is willing to put their entire life savings in the stock market at all-time highs.

The good news? You don’t have to go all-in with investing. In fact, you don’t even have to tap into your savings.

By using the leftover change from your everyday purchases, some apps give you access to smart portfolios designed by experts that adjust automatically as your money grows.

Remember: Even if you generate $2.50 worth of spare change per day, that adds up to $900 a year just from making your regular purchases — and that’s before those spare pennies earn money in the market.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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