The stock market entered June with some choppiness thanks to continued uncertainty around the impact of trade disputes on American companies. From talk about tariffs with Mexico and chilly relations with China, many investors are worried that businesses relying on overseas revenue will be feeling the pain later this year.
However, not all stocks are as exposed to potential political conflicts as others. There are a few uniquely domestic businesses that are insulated from the current trade turmoil and don't stand to lose as much even if U.S. relations with the rest of the world continue to sour.
Here are nine relatively low-risk income investments that are safe from the trade war.
Houston-based Powell Industries is a $400 million company that manufactures, sells and services custom-engineered electrical equipment and systems for energy infrastructure such as pipelines or oil refineries. It's a very specific line of work, and thanks to its expertise POWL has established stable relationships with big clients in the oil and gas sector. Since Powell is helping service the broader foundations of the energy industry and not itself pumping oil, it is insulated from commodity price volatility. Furthermore, a focus on facilities that include U.S. energy pipelines and processing facilities used by onshore "fracking" companies means there's little need to worry about imported oil or the impact of a trade war.
New Senior Investment Group
One thing the politics of trade cannot change is the demographic makeup of the U.S. And that makes senior housing giant SNR an incredibly stable bet regardless of any trade war. New Senior is one of the largest owners of senior housing facilities, with a portfolio of 133 properties across 37 states. And as aging baby boomers increasingly need around-the-clock care, there is steady demand from new tenants and reliable income from those already in residence. SNR is structured as a real estate investment trust, or REIT, and must deliver 90% of its taxable income back to shareholders. That means a persistent mandate for big dividends.
Community Healthcare Trust
Another REIT, the Community Healthcare Trust focuses on medical services such as dialysis clinics, medical office buildings and outpatient surgery centers across the United States. It owns or has a stake in about 105 real estate properties nationwide. Just as demographics create a strong case for senior housing, they create a serious tailwind for the health care industry. Regardless of economic trends, it's pretty much a sure thing that patients will continue to seek out the care they need to improve their quality of life – meaning tenants will have reliable business to support the rent and CHCT will continue to pay reliable dividends.
Cogent Communications Holdings
Cogent provides high-speed internet access, private networking and data center services to small and medium-sized businesses. And since you're reading this on the internet right now, you probably know how vital reliable communications services are to consumers and businesses of all sizes. These entities need firms like Cogent to provide website hosting, email and other applications to meet customers and keep their business running. The result is CCOI stock is quite insulated from any exterior trade conflicts.
Crown Castle International
Don't be fooled by the word "international" in the name. The bread and butter of CCI is the operation and leasing of more than 40,000 cell phone towers and roughly 70,000 miles of fiber optic telecommunications cables that serve almost every major U.S. city. Its nationwide portfolio of communications infrastructure connects essential data and wireless services for businesses and consumers. Like Cogent, this means reliable revenue from customers who will pare just about every expense before they decide to unplug and stop paying their wireless bill. It all adds up to reliable dividends, safe from politics.
TFS Financial Corp.
While some big banks are exposed to global trade tensions, $4 billion Midwestern financial stock TFSL is not. It is primarily a “retail" bank for consumers and small businesses in Ohio through 38 branches mainly in the Cleveland area. These services include the rather down-to-earth operations of leasing commercial buildings, originating mortgages and making construction loans. Banks that are community oriented may not be big growth businesses, but they are worth considering by investors eager to avoid the fallout from international trade disputes.
Flowers Foods is a nearly $5 billion bakery that makes a variety of products from breads to snack cakes and tortillas. Its brand portfolio includes Wonder Bread, Nature's Own, Tastykake and Mrs. Freshley's. While there may not be much growth in such a staples business, you can be sure that American families will keep eating sandwiches and making toast whatever macroeconomic trends take place. This sets the stage for a reliable business that will keep generating income for shareholders.
Another uniquely domestic opportunity for income investors is NorthWestern Energy, an electricity and natural gas utility that serves residential, commercial and industrial customers in Nebraska, the Dakotas and Montana. Its electric transmission network consists of more than 30,000 miles of power lines and almost 500 distribution substations, while its natural gas business boasts approximately 2,100 miles of pipeline. Electricity generation is one of those industries that sees stable demand. That makes NWE stock tailor-made for income investors – and its wholly domestic operations mean that this company has nothing to do with any international disputes that pop up.
Under-the-radar stock CVR Partners produces and sells specialty fertilizer products to retailers and wholesale distributors who serve farmers across the United States. Farmland isn't quite as plentiful as it used to be, as evidenced by suburban farms gobbled up for development and rural family farmers giving up on the business in recent decades. That means less acreage needs to produce more food – and fertilizers that increase yield are a big part of modern farming endeavors. UAN is a comparatively modest company worth about $400 million. But it is a very safe bet given the dynamics of domestic agriculture and future food supply needs.