Many folks are in agreement that the odds of a recession at some point over the next two years is quite high.
The yield curve has inverted, and with geopolitical tensions continuing to take a toll on consumer confidence, we’ll likely keep talking our way into a recession, at least until a U.S.-China trade deal is finally inked.
In any case, it’s essential to ensure your portfolio is insured with certain safety stocks that’ll hold their own should a market crash become a self-fulfilling prophecy. I’m not suggesting drastic measures such as going all-in on fixed-income securities and utility stocks, however.
Rather, I’d urge investors to adopt a risk-parity approach that considers both the bull and bear cases, both of which have a fair chance of playing out over the intermediate-term.
When it comes to playing defence, Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is a play that should be on the top of your list. While all members of the Brookfield family are great to own during any economic environment, Brookfield Infrastructure is in a class of its own with its portfolio of infrastructure assets that are absolutely vital for the markets that Brookfield serves.
Brookfield Infrastructure is really a one-stop-shop for quality infrastructure assets, including railroads, toll roads, ports, electric transmission lines, gas pipelines, data centres, and the like, all managed by experienced managers with a reputation for delivering outsized returns on invested capital.
The business of acquiring, constructing, and managing critical infrastructure is tough to get into. You need to be a trusted player in the space with deep pockets and the talent to get things done correctly.
Governments from emerging markets can’t trust their infrastructure to just any up-and-coming company. There are just too many regulatory hurdles to pass, and it’s these hurdles that are components of Brookfield’s moat.
When times get tough, infrastructure spending may be delayed until the next economic cycle, but Brookfield Infrastructure will continue to collect tolls from their roads, fees from utility bills, and all the other vital services that the firm provides to its target markets, making the name one of the best alternative asset treasure troves to own under any market conditions.
Shares of Brookfield Infrastructure sports a distribution that currently yields just shy of 3%. While the distribution seems small on the surface, it has the capacity to grow by leaps and bounds, through any market environment over time.
Stay hungry. Stay Foolish.
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Fool contributor Joey Frenette has no position in any of the stocks mentioned. Brookfield Infrastructure Partners is a recommendation of Stock Advisor Canada.