Ford Burns Rubber in China, While Select Medical and Chevron Shareholders Cash In

A three-year-long experiment intent on showing that life's most basic needs can result in market-beating portfolio gains, hefty dividend income, and a good night's sleep!

Mar 10, 2014 at 6:02PM

In May, I announced my intention to create a portfolio that embodied life's basic needs. To that end, over a period of 10 weeks, I detailed 10 diverse companies that I think will outperform the broad-based S&P 500 over a three-year period because of their ability to outperform in both bull markets and bear markets, as well as their incredible pricing power in nearly any economic environment.

If you'd like a closer look at my reasoning behind each selection, just click on any, or all, of the following portfolio components:

Let's look at how our portfolio of basic-needs stocks has fared since we began this experiment.


Cost Basis


Total Value


Waste Management










NextEra Energy















Select Medical










American Water Works





Procter & Gamble





AvalonBay Communities









Dividends receivable




Total commission




Original Investment




Total portfolio value




S&P 500 performance



Performance relative to S&P 500



Source: Yahoo! Finance, author's calculations.

For a second straight week it was all about the Benjamins, with two companies paying dividends and one going ex-dividend in preparation for delivering a payment to shareholders.

Show me the money!
A dividend-income standout of the hospital sector, Select Medical (NYSE:SEM), starts off the week with a $0.10-per-share payout. Select Medical's dividend yield has "dipped" to just 3.3% from close to 5% earlier this year, but given that its share price is up nearly 32% since inception, I'll give it a pass. Select Medical is benefiting from years of cost-cutting and should see positive growth trends from the Obamacare rollout which may result in the company declaring less in doubtful revenue in the coming years as more people obtain health insurance. If that happens, Select Medical's dividend could move even higher, or it could use the extra cash flow to purchase new equipment and give its hospitals an advantage over its peers.

Also putting money in our hands this morning is integrated oil and gas giant Chevron (NYSE:CVX), which paid out an even $1 per share. Chevron has been one of the primary drags on the Dow Jones Industrial Average thus far in 2014, but it belongs to a rare class of dividend-paying companies known as Dividend Aristocrats, which have all raised their annual payout annually for at least the past 25 years (Chevron's streak sits at 26 years). Although its refining margins have been under pressure over the past few months, crack spreads have been slowly improving, and oil is at nearly $103 per barrel -- both positive signs for what I believe is one of the best-run vertically integrated global oil companies.

Although refuse giant Waste Management (NYSE:WM) didn't place any money directly into our pockets, it did go ex-dividend this past week for shareholders of record as of today. Those shareholders will receive a freshly raised $0.375 per share dividend on March 21. Waste Management's business has been a bit stagnant lately due to weak metals prices weighing down its recycling segment, but the company has had absolutely no trouble passing along price hikes to its customers. Refuse removal is as far from a glamorous business plan as you get, but it's a basic-necessity service that delivers consistent cash flow.

Hitting the gas in China
The polar vortex may have put a damper on Ford's (NYSE:F) domestic auto sales, but the rejuvenated automaker floored it in China in February, reporting a 67% increase in sales to 73,040 vehicles. Even more impressive were sales of passenger cars which rose a whopping 88% to 56,284 vehicles. Specifically, sales of the Ford Mondeo rose 123%, while the Ford Focus jumped 13%. Ford continues to demonstrate that its mastery of fuel-efficiency, styling, and vehicle pricing is hitting the mark with the Chinese consumer. If it keeps up this pace, there's a genuine possibility that Ford could hit double-digit market share within the next three years in China.

PC freefall
It may have been another strong week for the overall market, but chipmaking giant Intel (NASDAQ:INTC) retraced a bit after research firm IDC announced that it sees PC sales weakening even more than it had originally forecast for this year. The forecasting firm had originally predicted a 3.8% decline in PCs in 2014, with a more modest 1% decline expected in 2015. IDC now expects PC sales to dip 6.1% in 2014 and to continue falling in each year through 2018. Intel, the dominant supplier of PC processors, would be the first hardware-producer to suffer. However, because it maintains such robust margins and cash flow from the PC side of its business, it can develop mobile processing chips and hardware for the cloud that will move Intel's chips into next-generation devices.

Growth in the Chinese Auto Market Is Unstoppable -- and These Two Automakers Are Primed to Benefit Most
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Ford, Intel, MasterCard, and Waste Management. It also recommends Chevron and Procter & Gamble. 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.

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