Note for TradingView users – feel free to download the list in this article here.
Theme is simple: Quality, cash cows, resiliency. Can withstand covid mutation shocks, inflation, great power competition from China, the media/political circus, and an overall high asset value environment.
Preserve capital, beat inflation and books solid returns. Add some ballast with dividend distributions.
These are part of a broader approach that also includes exposure to more risky assets such as crypto, ARK funds, etc. And this is also balanced with hard asset exposure like real estate which should continue to see gains in many markets well into 2022.
The list is part of an overall well balanced portfolio of diversified assets. I may hold positions in these assets throughout the year.
Funds & ETF’s
In my opinion, funds and etfs are a great way to manage the risks of individual securities and realize growth.
1. VDADX (or ETF versions VIG & VYM). This is a foundational holding in my portfolio. The chart tells the tale. Nothing sexy about it, just quality companies that steadily rise in value and spin off income back to investors. With top holdings such as Microsoft, Chase, United Health, Johnson & Johnson, Proctor & Gamble, this fund is positioned to keep doing just fine.
2. NOBL or QUAL (iShares USA Quality ETF). Over the last few months I have sought out quality and resiliency as asset prices go high and the world will continue to grapple with large existential challenges. This fund provides exposure to the likes of NVIDIA, Costco, BlackRock, Apple, Mastercard to name a few). NOBL offers strong dividend aristocrats, similar to VDADX but with further diversification.
3. UTF (Cohen & Steers Infrastructure closed end). This fund aims to capture the huge once in a generation infrastructure coming to theaters soon. Closed end may also help this fund be less volatile. An investor gains exposure to the likes of NEE, Enbridge, American Tower, Canadian Railway, Southern Co. in many different types of infrastructure sectors.
4. ESGU or ESGV. This is the future, environmental, social and governance funds have performed very well. I only see this accelerating in the new age we find ourselves in. Younger consumers want their companies and products to be responsibly sourced, healthier for them and others and not line the pockets of dictators. I like having large exposure to some of these strong companies that are being held accountable on some levels. Do not be confused, these companies are out to make massive profits, but this investing avoids things like big tobacco, child labor and unabated environmental degradation.
5. KRBN (KraneShares Global Carbon Offset ETF). This fund is admittedly non-contrarian and involves the sale of carbon credits. This is considered a most non-correlated asset. Investors seek non-correlated assets so that their overall portfolios can perform well in all environments and mitigate risk. For example, if all your capital was tied up in the top 5 FANG type stocks, then your fortunes rise and fall with just those assets. Having real estate, crypto, bonds, etc. can be un correlated to those. This is another example I am exploring early in the year.
6. IJH (iShares Core S&P midcap). Lot’s of great companies in the small to medium size delivering great products and value, why not own a slice of them as part of an overall strategy. Solar companies, REIT’s, William-Sonoma, medium sized regional banks, etc.
Quality Real Estate Investment Trusts return great value back to shareholders over the years. It’s a great way to diversify a portfolio with commercial real estate exposure that would normally be out of reach for most of us. REIT’s are required by their structure to return 90% of income back to shareholders in the form of dividends.
7. MPW (Medical Properties Trust). Guess what, no matter what happens in the economy or the world, human bodies and minds will always require healthcare at some point. MPW owns hospitals and clinics and continues to increase revenue. In addition, some of their leases are tied to CPI and inflation, meaning that the rental proceeds increase with inflation. Add a 5% juicy yield on top of this growth machine.
8. O (Realty Income). The secret is out, Realty Income is just one of the best REIT’s around. They own a growing and diversified portfolio of locations. Think Dollar Tree’s, Walmart’s, Home Depot’s, 7-11’s, Kroger’s, Walgreen’s, etc. It is also moving into European markets. This one is admittedly close to fully priced, but I still see a nice long term future of growth ahead.
9. CCI (Crown Castle). This is another one with a high valuation, but for a reason. It owns thousands of cell tower sites and continues to grow. Any dips I will be buying or at least have some exposure via ETF’s like VNQ. Add 5G and the infrastructure spending for further growth.
10. UHT (Universal Health Realty Income). Same idea as MPW, but probably an even better value. By many standards the stock is cheap and delivers a 5% yield. 35 years of dividend growth and a recession proof business!
11. STAG. Someone has to own all those Amazon warehouses, how about Stag Industrial? They own 517 industrial property buildings across 40 states. At time of this writing I see great value in this cash cow.
In my opinion, these are strong, cash cow companies that can withstand almost anything that 2022 can throw at them.
12. BRK.B. I just do not think I can go wrong with some Buffett and Mungie Pants in my life. The value powerhouse of quality great American companies in my opinion is second to none. This is the ultimate conglomerate holding companies that like to rake in massive fortunes. Why not own a slice? 69 operating companies across 45 equities provides awesome diversification instantly.
13. VZ (Verizon). Value play, stock has been punished long enough. safe 5% dividend yield. high and stable profitability never hurt.
14. GOOG. I think Alphabet continues to be the best of the so called FANGS. The stock remains underpriced compared to strong business growth trends.
15. QCOM (Qualcomm). Fairly reasonable valuation at the moment and a future of strong growth. Qualcomm is simply one of the best chip stocks.
16. RVP (Retractable Technologies). RVP is a gem hidden in plane sight. Most fair value stock estimates reflect a doubling of the share price and at least 27% upside potential. Retractable makes safety syringes, IV catheters, etc.
17. JPM (Chase)
18. MMM (3M)
19. WMB (Williams)
20. LOW (Lowes)
21. MDT (Medtronic)
22. ________________You tell me?
Note for TradingView users: you can download the list in this article here.