MasterCard Helps Make History, and NextEra Energy May Be on the Right Side of It

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!

Jun 9, 2014 at 6:05PM

Last 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

Not to sound like a broken record, but another week is in the books, and the broad-based S&P 500 still can't be stopped. For the week, the S&P 500 hit an all-time record high on four out of five days -- and the only daily loss was fractional. Given that this is a portfolio filled with generally low-volatility names, it's no surprise that it slightly underperformed the S&P 500 this week. But also note that it still tacked on gains and remains decisively ahead of the broad-based benchmark over the past 10 months. With nearly a year in the books and slightly more than two years to go, I have to say I'm extremely pleased with how well this group of diversified basic-needs stocks has performed as a whole.

Now that earnings season is in the rearview mirror (at least for another month) we can instead turn our attention to a number of individual and macro-oriented stories that made waves this week.


Source: Jeffery Beall, Flickr

Show me the money!
Although we usually examine dividend data first, we unfortunately didn't get to pad our pockets this week -- but that doesn't mean more payouts aren't right around the corner! Refuse and recycling giant Waste Management (NYSE:WM) went ex-dividend this past week, removing $0.375 per share from its share price in anticipation of paying shareholders on record as of June 6 this amount on June 20. While Waste Management's recycling business has struggled under the weight of weaker commodity prices, the constant demand for refuse removal continues to afford it excellent pricing power and the ability to focus on improving its operating efficiencies in order to grow its profits.

On a side note, we will be receiving our quarterly stipend from integrated oil and gas giant Chevron on Tuesday.

Get your motors runnin'
It was an extremely busy week for automaker Ford (NYSE:F), whose share price climbed to its highest level since late October following the release of its U.S. and China-based sales from May.

Within the U.S., Ford announced a 3% year-over-year increase in total vehicles sold to 254,084, its best May performance in a decade. Fueling its domestic growth was an all-time record month for the Ford Escape, which crossed the 30,000-vehicle mark for the first time in its history to 31,986 units, as well as strong Ford Explorer sales which crossed the 20,000-vehicle sold mark for the first time since July 2005. Lincoln also delivered substantial gains with sales up 21% for May as Ford's rebranding campaign appears to be hitting home with consumers. 

2014 Ford Escape, Source: Ford

In China, Ford reported continued growth with sales soaring 32% to 93,323 wholesales compared to a shade over 70,000 in the prior year period. Passenger cars remain one of its stronger selling points in China, with sales rising 35% in May, and up 46% year to date. Considering Ford's dual focus on creating sleek designs that consumers will actually want to buy, while also producing fuel-efficient and affordable vehicles, I'd suggest that shares could easily head higher.

It's the mobile way or the highway
In a Bloomberg report issued this past week, chipmaker Intel (NASDAQ:INTC) put to bed any rumors that it may consider shutting down its mobile chip unit in favor of finding new PC and microprocessing vendors. According to Intel's CFO Stacy Smith, "In five years every device will need to connect [to the Internet]," making Intel's investments into mobile processors mandatory if the company hopes to get its piece of the pie moving forward.

Thus far Intel's mobile reception has been lukewarm at best. Intel has delivered some key wins in tablets, but its future in smartphones is still up in the air. Given its brand reputation, though, I wouldn't count out Intel just yet and would instead note that it's made impressive inroads in big data center hardware, which should help balance the slow decline it's witnessing in PC sales.


Source: Beau Giles, Flickr

MasterCard gets "chippy"
In a retail first, Sam's Club, owned by Wal-Mart, announced this week that it was planning to issue chip-based credit cards to its members beginning June 23 in order to help secure customer data and prevent credit card data theft. Wal-Mart, if you recall, selected MasterCard (NYSE:MA) as its processing facilitator earlier this year, so as the co-brander of the chip-based card, MasterCard will also be setting a precedent in that it's waging an all-out war on hackers.

Since MasterCard is a processing facilitator and not a lender there are few factors that can adversely affect its business -- however, increasing levels of fraud are one of those factors. With this partnership, and likely many others to follow, MasterCard is laying the groundwork for consumers to continue their shift away from cash and toward credit-based forms of payments. If MasterCard isn't already on your personal watchlist, I'm not sure what you're waiting for!

Planning ahead
Lastly, NextEra Energy (NYSE:NEE) shareholders had to be licking their chops with excitement after the U.S. Environmental Protection Agency issued a proposal to reduce power plant carbon emissions 30% by 2030. While many electric utilities have switched some of their coal-fired plants over to cleaner-burning natural gas, a good number of utilities would still have a long way to go to be in compliance.

Source: Timothy Tolle, Flickr.

NextEra, on the other hand, has been proactively making this switch for years and boasts the nation's most diverse alternative-energy portfolio comprised of more than 10,000 GW of wind energy generation, as well as solar, geothermal, and hydroelectric to name a few others. In other words, this EPA proposal merely complements what it's already been doing and isn't a strain whatsoever on its long-term plans. For its peers, though, it could be something to worry about.

If you want to learn about more high-yielding stocks, look no further
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

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 recommends Chevron, Ford, Intel, MasterCard, Procter & Gamble, and Waste Management. 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.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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