New Investors: Aim for Stability, Not Just Market Beating Returns
When it comes to investing, especially for newbies, the allure of beating the market can be intoxicating. But, as seasoned investors will tell you, focusing solely on market-beating returns can lead to heartache and disappointment. Instead, consider these three key factors for long-term success:
1. Downside Protection
No investment is completely risk-free, but some are better equipped to weather market downturns than others. Look for companies with strong balance sheets, reliable cash flows, and a history of paying dividends. These factors can help protect your investments during economic recessions.
2. Recession Resiliency
Recessions are an inevitable part of the economic cycle. While some industries are more sensitive to economic downturns than others, there are steps you can take to minimize the impact on your portfolio. Consider investing in companies that provide essential services or products, like healthcare, utilities, and consumer staples. These companies often continue to perform well during economic downturns.
3. Income
Investing for income can provide a steady stream of returns, which can help offset any potential losses during market downturns. Look for companies that have a history of paying consistent dividends, and consider investing in income-generating vehicles like real estate investment trusts (REITs) or bond funds.
Case in Point: Agree Realty and ADC
Two such investments that offer stability, recession resiliency, and income are Agree Realty and American Data Centers (ADC).
Agree Realty
Agree Realty Corporation is a publicly-traded REIT that focuses on acquiring, developing, and managing retail properties. The company has a strong balance sheet, with a debt-to-equity ratio of 33.5% as of Q3 2021. Agree Realty also boasts a high-quality tenant roster, with industry leaders like Walmart, Target, and Costco as anchor tenants.
The company’s prudent portfolio management strategy has paid off, with FFO (Funds from Operations) per share increasing from $0.65 in Q1 2020 to $0.74 in Q3 2021. Agree Realty’s dividend yield currently stands at 3.7%.
American Data Centers
American Data Centers (ADC) is another solid investment option, particularly for those interested in the tech sector. ADC is a leading data center provider that offers colocation, build-to-suit, and powered shell solutions to businesses. The company’s growth is supported by strategic acquisitions at attractive cap rates and disciplined capital allocation.
The data center market is highly resilient, with demand for data center services continuing to grow, even during economic downturns. ADC’s diverse customer base, which includes Fortune 500 companies and government agencies, further bolsters its recession resiliency.
Impact on Me and the World
For individual investors, focusing on downside protection, recession resiliency, and income can help mitigate potential losses and provide a steady stream of returns. By investing in companies like Agree Realty and ADC, you can build a diversified portfolio that is well-positioned to weather economic downturns.
On a larger scale, the emphasis on stability and income can have a positive impact on the world. By investing in companies that prioritize these factors, we can help support economic growth and stability, even during challenging economic times.
Conclusion
While market-beating returns are nice, they should not be the sole focus of new investors. By prioritizing downside protection, recession resiliency, and income, you can build a solid investment portfolio that is well-positioned for long-term success. Companies like Agree Realty and American Data Centers offer just that, making them reliable investment options for both individual and institutional investors.
- Focus on downside protection, recession resiliency, and income for long-term investment success
- Agree Realty and American Data Centers offer stability, recession resiliency, and income
- Individual investors can build a diversified portfolio with these companies
- Emphasis on stability and income can have a positive impact on the world
