Our portfolio started the year off with a strong rally, but Wall Street still faces the threat of a recession and economic crisis. We continue to recommend a conservative and well-diversified portfolio of solid stocks and funds, most of which pay high, dependable dividends, notes Mark Skousen, editor of Forecasts & Strategies.
How did we get here? The burst of price inflation we’ve been experiencing began after the irresponsible policies in Washington kicked in. During the 2020-21 pandemic, the government flooded the economy with free money, leading to ballooning deficits. The Federal Reserve pumped trillions of dollars into the economy and the money supply grew 40%. The supply-chain shortages in response to the lockdown made matters worse.
The return of inflation was inevitable. And now we are paying the price.
The sooner the Fed ends inflation, the better. And in that respect, there is some good news. First, the Republican-controlled House will hopefully force Washington to control its wasteful habits. The debate over raising the debt ceiling is a good way to remind Congress of its spendthrift raises.
On the monetary side, Fed Chairman Jay Powell and his colleagues are determined to reverse the easy money policies of the past. The stock of money has stopped growing, and the price of money (interest rates) is going up fast, leading to a recession. As a result, I expect to see price inflation gradually come down in 2023.
As for my recommendations, our best-performing stock last year was Enterprise Products Partners (EPD). With oil prices recently surging again, EPD jumped 5.7% in January. Motley Fool now considers EPD “the safest high-yield dividend stock in the entirety of the energy sector.”
The EPD dividend yield was recently a mouthwatering 7.6%. The company has increased its quarterly distribution twice in the past year. In 2023, it will join the Dividend Aristocrats — companies that have increased their dividend for 25 years in a row or more.
My recommended action: Conservative investors should consider the high yields and potential growth in my favorite income stocks, including EPD.