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Utilities

It’s easy to see why utilities usually have the ability to withstand inflation: No matter how expensive things get, 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 (ED), American Water Works (AWK), and NextEra Energy (NEE) have been increasing dividends year after year.

More: Investment for beginners.

Food

Next, 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 presented serious challenges for numerous brick-and-mortar businesses, supermarket giant Kroger (KR) continued to thrive.

Kroger shares have climbed 6% in 2022, in stark contrast to the broad market’s double-digit decline.

Then there’s PepsiCo (PEP), 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.

More: How to buy a condo

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Apartments

Real estate is a well-known hedge against inflation. As the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.

But not all properties are the same.

To prepare for uncertainty in this economic climate, look into apartments.

No matter how much economic growth slows down, people need a place to live. And with real estate prices rising to unaffordable levels in many parts of the country, renting has become the only option for many people.

You can always buy an apartment building yourself, find tenants and collect the monthly rent checks. Of course, apartment-focused REITs can do that for you.

For instance, Camden Property Trust (CPT) owns, manages, develops and acquires multifamily apartment communities. It has investments in 170 properties containing 58,055 apartment units across the U.S. and offers an annual dividend yield of 2.8%.

Essex Property Trust (ESS) invests in apartments primarily on the West Coast. The REIT currently yields 3.4%, backed by its ownership interest in 253 apartment communities — in California and Seattle — totaling approximately 62,000 units.

Pour your portfolio a glass of recession resistance

Fine wine is a sweet comfort in any situation — and now it can make your investment portfolio a little more comfortable, too.

Ownership in real assets like fine wine could be the diversification you need to protect your portfolio against the volatile effects of inflation and recession. High-net-worth investors have kept this secret to themselves for too long.

Now a platform called Vinovest helps everyday buyers invest in fine wines — no sommelier certification required.

Vinovest automatically selects the best wines for your portfolio based on your goals, and it tells you the best times to sell to get the best value for your wine.

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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The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.