Elections bring uncertainty. While polls can foreshadow the probable outcome, it isn't guaranteed until all the votes are counted. Because of that, there's some unease in buying stocks before an election, especially for those just starting their investing journey.
But well-managed, financially strong companies in growing industries should thrive no matter the outcome. Four companies boasting those characteristics are Brookfield Infrastructure Partners (NYSE:BIP)(NYSE:BIPC), Duke Realty (NYSE:DRE), NextEra Energy (NYSE:NEE), and Realty Income (NYSE:O). Because of that, investors with $4,000 to put to work (or any number, really) could build a nice little election-resistant portfolio with this quartet.
Expecting a monster 2021 no matter who wins the election
Brookfield Infrastructure owns a globally diversified portfolio of utilities and energy, transportation, and data infrastructure businesses. These businesses are very resilient because long-term contracts and government-regulated rates back their cash flow. That durability has been on full display this year as its earnings are on track to grow despite some headwinds from economic shutdowns and foreign exchange fluctuations.
Meanwhile, the company's global diversification helps insulate it from the outcome of the U.S. presidential election. Because that, it won't affect the company's operations next year. That's why it's confident that its earnings growth will accelerate in 2021 as it benefits from additional expansion projects and acquisitions. Add that to its top-notch balance sheet and 4.2%-yielding dividend, and Brookfield Infrastructure is an excellent low-risk stock for investors to buy if they're uneasy about the election.
Duke Realty is a leading REIT focused on industrial real estate like warehouses. It currently owns 155 million square feet of rentable space across 20 major U.S. logistics markets leased to tenants like Amazon and UPS, which are its largest customers.
While the election could impact some real estate segments, the outcome won't dent the prospects of Duke Realty, given the need for more logistics space in the country. According to an estimate from commercial real estate services firm JLL, the U.S. could need an additional 1 billion square feet of industrial space by 2025. That's an enormous opportunity for Duke, driving its view that it can grow its cash flow and 2.4%-yielding dividend at a mid- to high-single-digit rate over the next few years no matter which party controls the White House.
This renewable energy giant doesn't need the Green New Deal to thrive
The cost of wind and solar power is declining at such a rapid pace that both should be cheaper than fossil fuels within the next few years, even without the help of a New Green Deal. Because of that, leading renewable energy developer NextEra Energy should prosper even if the current party maintains control.
That's evident in its outlook, which the utility recently increased and extended. It boosted its earnings forecast for next year thanks to its renewable energy development pipeline's strength. Meanwhile, it now expects to expand its earnings at an above-average pace through 2023 thanks to the increasing visibility in its growth prospects without any potential lift from the Green New Deal. Because of that and its top-tier balance sheet, NextEra expects to grow its 1.9%-yielding dividend at around 10% annually through at least 2022. That visible growth makes NextEra a great way to invest in the future of energy ahead of this contentious election.
The definition of dependable income
Realty Income has one objective: Deliver dependable income to its investors each month. It has delivered on that goal for decades, recently paying out its 603rd consecutive monthly dividend. Even better, the REIT has a long history of growing its payout. It recently notched its 108th increase since going public, and is currently on a streak of 92 consecutive quarterly raises.
That dependable monthly income stream will continue no matter who wins the election. Backing that view is the company's durable real estate portfolio. While 2020 was a tough year for landlords, Realty Income's tenants paid a much higher percentage of their rent than those of its peers because it focuses on high-quality properties leased to high-quality tenants.
The REIT complements its strong portfolio with a conservative dividend payout ratio and elite balance sheet. Because of that, it was one of a handful of REITs that continued growing its payout this year (it now yields an attractive 4.6%) despite all the turbulence in the commercial real estate sector. Given its success in this challenging year, there's a high probability that it will continue thriving over the next four no matter who occupies the White House.
A great election-resistant mini-portfolio
There's no doubt that the election's outcome could have an outsized impact on some stocks. But it likely won't affect Brookfield Infrastructure, Duke Realty, NextEra Energy, and Realty Income. Because of that, beginning investors can confidently build out a mini-portfolio of these stocks with a few thousand dollars before the election. All should thrive no matter who wins, which makes them safe options amid the current election uncertainty.