3 Investment Ideas for 2014

Wondering what to do with your portfolio this year? Check out these investment ideas for 2014.

Feb 5, 2014 at 1:44PM

Outstanding performance in the stock market last year has left investors wondering what to do with their portfolios. Here are three great investment ideas for 2014.

1. Buy high-quality growth stocks
Investors should consider high-quality growth stocks for 2014. Growth stocks boast higher annual revenue and earnings-per-share growth than the market on average, which can translate into higher long-term returns.

Apple (NASDAQ:AAPL) is a prime example of a high-quality growth stock. The company boasts an iconic brand that's recognized worldwide, a loyal customer base, and a strong cash-allocation plan. Last year, Apple announced a significant increase in the company's program to return capital to shareholders, including a major share repurchase program and a 15% hike in the dividend. Going forward, Apple must increasingly rely on innovative new products and new product categories like wearables and TVs to reignite revenue and profit growth. Apple also hopes its recent China Mobile (NYSE:CHL) deal will help it to boost sales in the world's largest smartphone market. High-quality growth stocks like Apple are sure to be among the top investment ideas for 2014.

2. Consider a different type of income investment
Income investors should look to energy master limited partnerships, or MLPs, in 2014. MLPs offer high current income, steady dividend growth, inflation protection, and tax advantages. On top of those benefits, they also offer capital appreciation as the domestic energy boom continues.

You can purchase MLPs directly or buy a fund specializing in this industry. For direct purchase, look at a pipeline company like North America's largest midstream energy company, Kinder Morgan Energy Partners LP (NYSE:KMP). The company recently offered guidance through 2016, projecting distribution growth of 5% annually. To achieve this growth and profit from growing U.S. production, the company will expand its pipeline network. Because pipeline companies don't depend on the price of oil and gas, they offer a reliable dividend. Kinder Morgan's dividend yield is 6.8%. The company has steadily increased its distributable cash flow over the past several years  and raised its dividend by more than 5% last year. Management expects to grow core operating earnings by 13% next year, most of which will be funneled straight to its unit holders.

Investors can also consider MLP exchange-traded funds (ETFs). Owning a variety of MLPs through a fund reduces company-specific risk. As the U.S. moves closer to energy self-sufficiency, an MLP ETF is a more diversified way to capitalize on our domestic oil boom. One example is the Alerian MLP Index ETF (NYSEMKT:AMLP), which offers a low-fee, indexed approach. Its return is driven by the performance of the 25 MLPs that comprise the underlying index. The ETF pays a dividend yielding 6% and has outperformed the energy sector since the fund's 2010 inception. Look for energy MLPs to be among the best investment ideas for 2014.

3. Keep your emotions in check
The stock market is off to a rocky start in 2014, leaving some investors feeling overly emotional. Yet the single most important thing you can do is keep your emotions in check. Investment decisions are often rushed by fear and greed -- and neither results in a good outcome.

Warren Buffett once said: "Success in investing doesn't correlate with IQ. ... What you need is the temperament to control the urges that get other people into trouble in investing." Leave it to Warren Buffett to sum up one of the best investment ideas for 2014 and beyond. 

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Nicole Seghetti owns shares of Apple. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and China Mobile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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