Chris’ note: Yesterday, the Fed hiked rates by three quarters of a point for the fourth straight month. This raises the chance that the U.S. economy will fall into a recession.
Luckily, one strategy is still showing signs of strength… even as the rest of the economy takes a hit. Income investing expert and friend of Legacy Brad Thomas knows all about it. And he’s put together a list of companies that will continue to pay growing dividends through the tough times. Check it out here.
Then read on for more from Brad on why a recession is baked in at this point… and how to earn rising streams of income through the coming downturn.
The warning signs are flashing: A recession is on the way.
Last week, the world’s most reliable recession indicator flipped negative.
I’m talking about the spread – or gap – between long-term and short-term bond yields.
Take a look…
I’ll show you how it works in a moment…
But as you can see, there’s a pattern. Shortly after the 10-year Treasury yield (blue line) falls below the 3-month yield (orange line) the U.S. economy has gone into a recession.
And just last week, it happened again.
We can’t be sure exactly when the next recession will start… But I want to make sure we’re prepared.
That’s why my team and I at Wide Moat Research have been hunting down the best opportunities to build growing streams of income… even if the economy takes a hit.
Our focus is on companies with proven track records of consistently raising their dividend payments to shareholders.
This means you get rewarded as an investor with rising income streams… even through difficult times.
Today, I’ll share one of the ideas with you… a safe company paying what I call an “ultra yield.”
The spread between the yield on the 10-year and 3-month Treasurys is called the yield curve.
Normally, the spread is positive. The yield on the 10-year T-note is higher than it is on the 3-month T-bill.
That makes sense… Investors demand a higher rate of return for taking risk over a longer period.
But when the short-term yield is higher than the long-term yield, the spread becomes negative. This happens when investors move money from short-term bonds to long-term bonds.
Long-term bonds do well when economic growth slumps. So a negative spread signals investors are less confident in economic prospects over the long term…
And as it’s done in the past, it signals a high probability of a recession in the coming year. In fact, a negative spread has accurately predicted every recession in the past 50 years.
Naturally, this is raising concerns about the devastating effects of a recession on our retirement nest eggs.
But you don’t have worry. Instead, you can own safe ultra-yield stocks to see you through.
My team and I keep a list of stocks that fit into this category.
And Enbridge (ENB) is one of our favorites.
It’s headquartered in Alberta, Canada. It’s North America’s largest oil and gas pipeline company. And it’s responsible for keeping Toronto warm in winter by piping in natural gas from Canada’s vast gas basins into the city.
Toronto has brutal winters with lows that can reach the negatives. So Enbridge isn’t optional. It’s a necessity.
And it’s not just Toronto that relies on Enbridge’s pipelines. They also carry natural gas into Vancouver, New York, Chicago, Boston, and Seattle.
That’s why it can sign 50-year contracts with oil and gas companies.
In short, the chances of Enbridge going away any time soon are very low.
Even better, its dividend is solidly established and has a proven track record of growth.
Enbridge has been raising its dividend payouts to shareholders for 67 years straight.
And over the past 27 years, it has grown that payout at a 10% average compound annual rate.
At this writing, Enbridge’s shares are trading at $39.06. That’s roughly 16% lower than its 2022 high of $46.81.
That gives its $2.62 per-share annual dividend a yield of 7% – well above what you’ll find with most other stocks today.
Safe ultra-yield dividends companies like Enbridge are offering will go a long way to easing your financial concerns.
Especially when you buy at bargain prices like what we’re seeing today.
And if you’re interested in taking advantage of lower stock prices to build reliable streams of recession-proof income… I recently recorded a Q&A all about it.
As you’ll see, a secret in this list helped me make back my millions after I lost it all in the 2008 crash.
And I’ve found a way you can get paid by hundreds of the fastest-growing companies in North America… using just one ticker.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily