The 20s are already shaping up to be a dangerous decade for investors, with the return of geopolitical stressors adding fresh uncertainty into the markets.
For some new investors, the events of the last two weeks could be the first time that tensions in the Middle East have been high on their agenda, with gold and defence stocks rising and cyclical asset types such as bank stocks taking a backseat.
Perhaps just as pressing could be the potential for a range of sectors to enter a long period of decline in coming years. Known as “peak decade,” a perceived downturn in auto manufacturing and oil demand could coincide with a number of market disruptors such as the weakening power of central banks, ageing populations, and widening economic inequality.
Stay safe and grow wealth amid market disruption
The 20s will be ripe with challenges, and the first few weeks of the new decade have already provided a glimpse of that. What investors should be looking for is a combination of growth and defensively diversified assets.
Getting out of hydrocarbons and into renewables is a major theme for the 20s. Northland Power offers a strong play on high growth in the green energy sector, especially for key wind power exposure, though the company is diversified across a broad spread of alternative energy sources such as solar and biomass. Its 4.18% dividend makes for a meaty yield suitable for a basket of income stocks.
While natural gas could see tailwinds this year, despite analysts bullishness on the clean fuel outperforming oil, the renewables angle is what makes Northland Power attractive.
From Starbucks to Microsoft to BlackRock, going green is good business right now. With Jim Cramer underlining the environment as stakeholder angle, blue-chip upside in the 20s is likely to follow this trend.
While Brookfield Asset Management pays a substantially lower yield of 1.05%, its spread of assets and office locations makes for a strongly defensive play that an investor could stash in a long-range portfolio and forget about for years to come.
Its world-class asset management expertise takes in real estate, renewables, and infrastructure, as well as private equity in the Americas, the U.K., and Australia.
By mixing its renewables exposure with other defensive assets, Brookfield Asset Management makes a strong stock to stack alongside Northland Power without too much risk of overexposure.
Both companies offer access to the high-growth trend of the green energy space at a time when big corporations are swinging around toward climate-focused strategies.
The bottom line
From “peak decade” concerns to localized tensions, there are plenty of reasons to start getting defensive with a portfolio based on TSX income stocks.
The green energy megatrend is just getting started, driven by lower oil and an increasing focus on environmentally friendly business practices. For upside in the green energy space, Northland Power and Brookfield Asset Management are potent buys.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Starbucks. Tom Gardner owns shares of Starbucks. The Motley Fool owns shares of and recommends Brookfield Asset Management, Microsoft, and Starbucks. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft.