Is the Federal Reserve about to wrap up this tightening cycle? Many investors appear to be betting on it, but the bottom line is this is still a time to be cautious. I like National Fuel Gas Co. (NFG), though keeping your buying steady and incremental has rarely been more important, explains Roger Conrad, editor of Conrad’s Utility Investor.

Traditional income stocks enjoyed a big rebound last month: After being deep in the red, the Dow Jones Utility Average is now solidly in the black. And a substantial majority of stocks in my Utility Report Card had a positive Q1, while adding to gains so far in April.

Encouragingly, many of last year’s largest decliners are among 2023’s biggest winners so far. But it’s also fair to ask just how much longer the past month’s market rally can continue—given the obvious dissonance between stubbornly high inflation and apparent investor expectations that interest rates are going lower later this year.

Trying to anticipate and bet on future Fed actions has lost a lot of people a great deal of money over the years. And I’m convinced as ever that tightening money and constraining investment now will only lead to higher inflation later, as identical central bank actions did several times from the late 1960s to the late 1980s.

National Fuel Gas Co. (NFG)
Chart, histogram  Description automatically generated

Yet stocks of the best-in-class companies I highlight are always in style when they trade at good prices. And that’s the case now for NFG, one of my best ideas for fresh money.

National Fuel’s utility and regulated pipelines fully support its dividend growth, making it one of the safest ways to play a likely rebound in natural gas prices. But again, the best way to pick up shares is incrementally, rather than all at once.

Buy one-third of what you intend to invest now. Take another third after it announces Q1 earnings and updates guidance, and buy the final piece this summer.

Recommended Action: Buy NFG.

Subscribe to Conrad’s Utility Investor here...