Whether current turmoil is a correction or a stock market crash there are stocks that investors should consider to protect their wealth. The current turbulence facing the markets is partially due to inflation. Thus, it makes sense to protect one’s investment against the risks of inflation. A lot of the rationale for hedging against inflation also applies to protecting portfolios against downside risk; precious metals, commodities, REITs, and other forms of diversification are smart strategies.
Aside from inflation, there are many other factors contributing to current volatility. The commercial development of artificial intelligence is moving into a new phase. Investors desperately want to see returns from the substantial early investments into AI, particularly generative AI.
The strategies for diversifying away from risk outlined in this article apply no matter what happens during this most current period of volatility. That said, let’s look at seven stocks that can help investors protect wealth in these turbulent times.
Agnico Eagle Miners (AEM)
Agnico Eagle Miners (NYSE:AEM) Iis one of the largest gold stocks as measured by market capitalization and a reasonable investment during current volatility. Gold stocks tend to perform well during market downturns as investor trust in the financial system wanes. Gold has an intrinsic value that is more easily quantifiable than that of fiat currencies and other man-made financial assets.
That spiel aside, let’s look at what makes Agnico Eagle Miners particularly attractive at this time. The share price for one is a good reason to consider AEM shares. Those shares currently trade for $73 which is below the consensus target price of $81.Investors who jump in now will get a nice little income boost in the form of dividend yielding 2.18%. That dividend is relatively stable and was last reduced nearly a decade ago.
The company is currently in exploration mode following a strong second quarter that saw it report a strong cash position. That strong cash position is a result of the company’s strong operations. Agnico Eagle Miners is among the top 10% of performers based on operating margins.
Exxon Mobil (XOM)
When it comes to big oil investments the choice often boils down to Exxon Mobil (NYSE:XOM) stock or Chevron (NYSE:CVX).
I’ve repeatedly said that I prefer ExxonMobil because the company is better at turning invested capital into returns than Chevron. In fact, Chevron has historically destroyed value by that measure, with capital costing the firm more than it has returned.
More recently Exxon Mobil has outperformed Chevron as earnings from the latter failed to meet expectations in the second quarter. Meanwhile, Exxon Mobil beat expectations during the period. Both firms are benefiting from record production in the Permian Basin But Exxon Mobil’s earnings increased by 17% while Chevron’s profits dropped by 19%.
Exxon Mobil is performing well while also providing dividend Income yielding to 3.2%. that yield effectively hedges against an equivalent amount of downturn in stock price, not that XOM shares are currently falling. XOM shares will continue to act as a strong buffer against current market volatility.
DTE Energy Company (DTE)
Utilities stocks, particularly those with a focus on natural gas and electricity like DTE Energy Company (NYSE:DTE) tend to do well in volatile markets.
The relative inelasticity of demand for both of those services is part of the reason DTE Energy Company is a stock worth considering now to protect your wealth. However, that’s also true of many other similar firms that also provide natural gas and electricity. What sets DTE Energy Company apart is several factors.
Strong performance is part of the equation. DTE Energy Company just beat expectations with its second quarter earnings report on higher electricity demand. The company continues to work to shore up its infrastructure with heavy investment during the second first half of 2024 valued at $2 billion. That puts the company on track to meet its goal of investing $4 billion to improve its infrastructure during the year.
The net effect is that DTE stock appears to be a strong investment at the moment overall.
Corteva (CTVA)
Corteva (NYSE:CTVA) is an agriscience firm working to help farmers increase crop quality and volume. The company develops seeds for specific purposes, produces crop protection, and also offers data analysis tools. The stock is one to consider now because it is both adjacent to the commodities sector and relatively underappreciated.
Agricultural commodities, along with commodities generally, perform well during downturns. Consumers and investors return to that which has utility at such times.
I believe Corteva will fare well, for one, because it is undervalued at the moment. Investors should get in now while its relatively modest dividend is yielding greater returns.
While the overall business is relatively stagnant investors will like the fact that Corteva increased its dividend during the most recent period. The company has also instituted a share buyback program. Both of those factors indicate that the company has a strong balance sheet and is prepared to reward shareholders.
Realty Income (O)
Realty Income (NYSE:O) is one of the best REITs available to investors. Let’s start with what makes REITs so attractive during inflationary periods and then move to what makes O stock a particularly strong REIT choice.
Generally speaking, REITs provide dividend income, diversification benefits, exposure to tangible assets, and other defensive characteristics that allow them to perform well in market corrections.
REITs must distribute 90% of taxable income in the form of dividends to shareholders. They’re also relatively disconnected from the broader stock market. REITs have a little correlation to the broad stock market and therefore act as a diversification tool. They also own physical real estate which is a tangible asset that tends to appreciate in value during inflationary periods.
All of that is true of Realty Income which is one of the most reliable REITs overall, providing a dividend yielding 5.2% currently. It remains one of the easiest choices for investors looking to protect their wealth.
SPDR S&P 500 ETF (SPY)
The SPDR S&P 500 ETF (NYSEARCA:SPY) provides clear diversification benefits overall that are especially attractive during this most recent correction. The exchange traded fund provides broad exposure to the stocks that collectively make up the S&P 500. Its performance over the past 10 years can be found here. That performance speaks to the rationale for diversifying into a large index fund.
Investors in the SPDR S&P 500 ETF Have received average annual returns above 13% for the
last 10 years. The rule of 72, Which estimates the number of years required to double an
investment, suggests that $10,000 invested today should take roughly 5.5 years to double through SPY.
The top 10 holdings in the ETF include six of the seven so-called Magnificent Seven with the exception of Tesla (NASDAQ:TSLA). Those 10 positions make up more than 1/3 of the ETFs overall weight. so, It is Well exposed to the companies that have contributed so much of the recent growth to the stock market as well as the even more recent trouble. That’s sort of the point of index funds: investors have to roll with the punches and now that the ETF is down a little bit it may be an excellent time to establish a position from which to hold indefinitely.
SPDR Gold MiniShares Trust (GLD)
SPDR Gold MiniShares Trust (NYSEARCA:GLD) makes sense for investors who believe in gold as an investment during corrections and those who want greater diversification than individual positions offer.
It is an ETF that has provided 11% annual returns over the last five years and 18% returns in 2024 alone.
The SPDR Gold MiniShares Trust does not comprise multiple stock positions, instead dealing directly in gold itself. It is backed by gold bars held in London vaults rather than a collection of multiple positions in stocks including Newmont (NYSE:NEM), for example.
For investors who are particularly worried about global inflation, GLD makes a particularly strong investment at the moment. One of the benefits of the investment is that you or I don’t have to physically own and be responsible for the gold it represents.
The price of GLD has steadily risen over the past five years and is picking up pace in 2024. Now is a good time to consider it for short-term, diversified gain potential.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
