Five High-Income Commodities Investments to Purchase to Protect Against Putin, Inflation
By: Paul Dykewicz,
Five high-income commodities investments to purchase offer protection against the unabated attack of Ukraine ordered by Russia’s President Vladimir Putin, the largest inflation in 40 years and Fed rate hikes that are expected to continue in 2022.
The five high-income commodities investments to purchase include those involved in oil and grain production that are proving to be in short supply with no relief in sight. Putin’s launch of what he called a “special military operation” to send Russian troops to invade Ukraine on Feb. 24 has disrupted the neighboring nation’s agricultural production, led to theft of the grain and imposed an ongoing blockade in the Black Sea to stop Ukrainian farmers from exporting their crops.
Crude oil inventories are down to a “dangerously low point” across Europe, North America and Organisation for Economic Co-operation and Development (OECD) Asia, while spare production capacity from OPEC+ nations slid to the lowest levels since April 2020, according to BofA Global Research. Inventories of petroleum products also have fallen to “precarious levels” for middle distillates and even gasoline as the peak U.S. driving season approaches this summer, the investment firm added.
Refined petroleum cracks — caused by the differences between crude oil and the prices of wholesale petroleum products such as gasoline — recently have “spiked to record levels,” contributing to volatility, BofA wrote. In addition, strategic oil barrels held by OECD governments already are low and likely to decline steeply going forward, leaving consumers exposed to future negative supply shocks, BofA predicted.
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Seasoned Wall Street Veteran Chooses KYN as One of Five High-Income Commodities to Purchase
Kayne Anderson Energy Infrastructure Company (NYSE: KYN), a Houston-based closed ended equity mutual fund launched and managed by KA Fund Advisors, LLC., provides the largest payout of the five high-income commodities investments to purchase. KYN offers a current dividend yield of 8.6% and is a recommendation of Bryan Perry, a high-income aficionado who is a veteran of Wall Street firms and the editor of the Cash Machine investment newsletter.
The plan that Perry shared with his subscribers is to use KYN to increase the weighting of the newsletter’s model portfolio to tap into a secular transition to natural gas from coal at America’s largest electric utilities. The mutual fund provides exposure to the rising demand for exporting natural gas to Europe and Asia through liquified natural gas (LNG).
KYN seeks to provide high after-tax total return with an emphasis on giving dividend payouts to its stockholders. The fund intends to invest at least 80% of its total assets in securities of energy infrastructure companies.
Its investment focus spans the spectrum of North American energy infrastructure companies engaged in traditional midstream energy, natural gas infrastructure, renewable infrastructure and utilities. Renewable infrastructure companies and utilities tend to have reduced volatility and correlation to the broader equity markets, contracted or regulated cash flows, multi-year growth visibility and attractive environmental, social and governance (ESG) characteristics.
Kayne Anderson MLP Investment Co. (NYSE: KYN) has jumped 1.54% in the last week, 3.71% in the past month, 11.89% in the past three months, 23.61% so far in 2022 and 24.04% in the past year, as of March 26.
Chart courtesy of www.stockcharts.com
Pension Fund Chairman Recommends Broad Dividend-paying Energy Fund
Bob Carlson, a pension fund chairman who also leads the Retirement Watch investment newsletter, currently is recommending New York’s Cohen & Steers MLP & Energy Opportunity Fund (MLOAX) in all the portfolios he detailed in his June 2022 issue.
Oil and natural gas should be good investments as Europe looks to reduce dependence on Russian exports, Carlson told me. Energy producers in the United States are seeking to boost cash flow and earnings, not maximize drilling expenses in the short run to increase output, he added.
Bob Carlson, who leads Retirement Watch, meets with Paul Dykewicz.
Good investment opportunities can be found with companies that provide the pipelines, storage facilities and other infrastructure to supply the world with oil, natural gas and other energy sources, Carlson continued.
“One of the attractive qualities of these investments is that their revenues are independent of the prices of the commodities,” Carlson counseled. “The firms charge fees for their services, and the fees often are adjusted for inflation. Their revenues and earnings depend on the volume of commodities passing through their facilities, not the price of the commodity.”
Key energy service companies provide total returns, aided by current income and price appreciation, through investments in energy-related master limited partnerships (MLPs) and securities of industry companies, Carlson pointed out. Those businesses are expected to derive at least 50% of their revenues or operating income from exploration, production, gathering, transportation, processing, storage, refining, distribution or marketing of natural gas, crude oil and other energy resources.
Chart courtesy of www.stockcharts.com
Cohen & Steers Fund Leads List of Five High-Income Commodities Investments to Purchase
Cohen & Steers MLP & Energy Opportunity Fund recently held 55 positions and had 48.7% of its portfolio in the 10 largest positions. Top holdings of the fund included Enbridge (NYSE: ENB), Cheniere Energy (NYSEAMERICAN: LNG), Targa Resources Corp. (NYSE: TRGP), Oneok Inc. (NYSE: OKE), Williams Companies (NYSE: WMB) and Energy Transfer (NYSE: ET).
The fund has achieved strong returns since April 2020. In fact, it has been on an upward trajectory since the second half of December 2021.
“Crucially, oil prices have held up well even in the face of a slowing Chinese economy and widespread lockdowns,” according to BofA. “Given that most China indicators point to a major decline in mobility across the country, any improvement in the COVID-19 situation in large Chinese cities could send oil prices much higher.”
Exxon Mobil Earns Berth Among Five High-Income Commodities Investments to Purchase
Exxon Mobil Corp. (NYSE: XOM), of Irving, Texas, is another of the five high-income commodities investments to purchase. The oil and natural gas company has spiked 6.23% in the last week, 18.14% in the past month, 24.85% in the past three months, 60.25% so far in 2022 and 71.32% in the past year, as of March 26.
With a bull market currently underway in the oil patch, Exxon Mobil became a recent recommendation in the Fast Money Alert advisory service co-led by Mark Skousen, PhD, and Jim Woods. Exxon Mobile is one of the biggest and best, large-cap energy companies in the world.
In 2021, Exxon Mobil, the world’s largest refiner, produced 2.3 million barrels of liquids and 8.5 billion cubic feet of natural gas per day. At the end of 2021, its reserves reached 18.5 billion barrels of oil equivalent, 66% of which were liquids. The company’s global refining capacity totals 4.6 million barrels of oil per day and ranks as one of the largest manufacturers of commodity and specialty chemicals.
Another plus is that oil prices have soared due to a combination of robust demand dynamics and constricted supply caused in part by the war between Russia and Ukraine, Skousen and Woods wrote in their May 2 issue of Fast Money Alert. With no end in sight to Russia’s ongoing invasion of adjacent Ukraine, the “smart money” is betting on higher energy prices, and the even smarter, faster money is betting on XOM, they added.
Chart courtesy of www.stockcharts.com
Skousen Selects EPD of One of the Five High-Income Commodities Investments to Purchase
Oil has done much better lately as an inflation hedge than gold, said Mark Skousen, who is recommending Enterprise Products Partners (NYSE: EPD) in his Forecasts & Strategies investment newsletter. Houston-based Enterprise Products Partners has jumped more than up 28.92% year to date and ranks as the newsletter’s “best performer” so far in 2022, Skousen added.
Skousen, who also leads the Five Star Trader, Home Run Trader and TNT Trader services, recently was a featured speaker at the Vancouver Resource Investment Conference and recommended oil as an investment, especially for those seeking inflation protection.
The company is one of the largest publicly traded partnerships and a key North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals. In addition, the company’s services include natural gas gathering, treating, processing, transportation and storage.
Plus, Enterprise Products Partners provides NGL transportation, fractionation, storage and import and export terminals. It further offers crude oil gathering, transportation, storage and terminals, along with petrochemical and refined products transportation, storage and terminals, as well as a marine transportation business.
Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.
I personally have owned Enterprise Products Partners since shortly after the 2020 stock market crash when I purchased the stock as it started to recover. The stock has been trending upward since the end of 2021 and is projected to keep climbing as oil prices remain high or even rise further with Russia waging its war in Ukraine and seizing control of additional land in that nation’s eastern region in violation of international law. Russia in facing economic sanctions from the 27-nation European Union (EU), the United Kingdom, the United States, Canada, Japan, South Korea, Australia and other countries to pressure Putin to withdraw his troops from Ukraine.
Putin’s actions have caused so many civilian deaths and injuries that U.S. President Joe Biden, U.K. Prime Minister Boris Johnson and key European Union leaders have accused the Russian leader of “war crimes.” Indeed, the International Criminal Court in the Netherlands is obtaining evidence of potential war crimes in Ukraine ordered by Putin, but Russia does not recognize the tribunal’s jurisdiction.
Chart courtesy of www.stockcharts.com
Money Manager Picks One of Five High-Income Commodities Investments to Purchase
Michelle Connell, a seasoned investment professional, told me that she likes farm machinery company Deere (NYSE: DE) to profit from agriculture. A former portfolio manager, Connell now serves as president of Dallas-based Portia Capital Management, said she still favors Deere despite its 14% drop after it reported results last week.
Michelle Connell, CEO, Portia Capital Management
Deere’s key issues are supply-related, since demand for agricultural equipment remains strong, especially for the company’s machinery that is more environmentally friendly than its rivals, Connell continued. The company also provides the farming industry with autonomous equipment, Connell added.
Wall Street analysts expect Deere to have a better story and performance in the second half of 2022 and in full-year 2023. Connell cited the following to support her recommendation of Deere:
-More than half its revenues come from large agriculture.
-If the war in Ukraine continues, U.S. farmers will benefit from higher prices for their crops.
-Increased agricultural profits mean that that farmers and farming corporations will be more likely to buy large, expensive farm equipment.
Deere has fallen back since its recent high on April 20, so investors should be able to purchase shares at reduced prices, Connell continued. It already has been rebounding in the past week.
Chart courtesy of www.stockcharts.com
Supply Chains May Improve as China Starts to Lower COVID Curbs
As China has started to relax its COVID-19 restrictions, the country may allow goods produced there to start flowing normally again in the weeks ahead. China’s lockdowns have affected an estimated 373 million people, including roughly 40% of its gross domestic product (GDP). Disrupted supply chains have affected products such as rice, oil and natural gas.
Shanghai, home to the world’s largest port and 25 million residents, has strained to unload cargo due to strict regulations that have caused shipping containers to stack up. Some Shanghai residents posted videos online to complain about a lack of food, even though government officials tried to block such public expressions of frustration.
Chinese authorities also drew criticism for forcibly separating young children with COVID-19 from their parents to in trying to stop the spread of a new, contagious subvariant of Omicron, BA.2. The variant also has been causing new infections in European nations such as Germany, the Netherlands and Switzerland.
U.S. COVID Deaths Rise Past 1-Million Threshold
U.S. COVID-19 deaths crossed the 1-million threshold last week and have jumped further to 1,004,121 as of May 27, according to Johns Hopkins University. Cases in the United States, as of that date, hit 83,837,114. America holds the dubious distinction as the country with the highest numbers of COVID-19 deaths and cases since the global pandemic began.
COVID-19 deaths worldwide totaled 6,284,534 on May 27, according to Johns Hopkins. Cases across the globe have climbed to 527,841,016.
Roughly 77.8% of the U.S. population, or 258,562,059, have obtained at least one dose of a COVID-19 vaccine, as of May 26, the CDC reported. Fully vaccinated people total 221,128,528, or 66.6%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 103.1 million people, up roughly 500,000 in the past week.
New data on so-called “long-haul” COVID patients released on May 24 reported that even though some symptoms improve others may persist, according to Chicago’s Northwestern Medicine Neuro COVID-19 Clinic. Most of the 52 patients included in the Northwestern study reported “brain fog,” numbness or tingling, headache, dizziness, blurred vision and fatigue, even 15 months after initial diagnoses of COVID-19.
The five high-income commodities investments to purchase are intended to profit from rising energy and grain prices. Despite the market’s volatility, the highest inflation in 40 years, the Fed’s plan for further interest rate hikes to curb price hikes and increasing federal deficits, investors are finding profitable opportunities in energy and grains.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.