NextEra Energy's Spinoff Surges, While Intel Has Big Shoes to Fill

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 30, 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 or anything, but the Basic Needs portfolio once again outperformed the benchmark S&P 500 this past week: The iconic U.S. index dipped fractionally by 0.1% while the Basic Needs portfolio gained about 0.5% to widen its outperformance to 2.9%, its highest level since inception.

The real difference, as you can see from the figures above, is the $277 boost received in the form of dividends since this experiment began last August. Dividends provide supplemental income that, when compounded over time, can make a substantial difference in an investor's retirement account. Based on the performance of this portfolio thus far, and its nearly 3% yield, I still anticipate a hefty long-term outperformance relative to the S&P 500 when all is said and done.

Show me the money!
Since dividends are such a crucial component to the success of this portfolio, let's check out our lone dividend news story of the week.


Source: AvalonBay Communities.

Residential real-estate investment trust AvalonBay Communities (NYSE:AVB) went ex-dividend, so a payday is right around the corner. Shareholders of record as of today (June 30) will receive a bountiful $1.16 per share stipend on July 15. Avalon's current $4.64 in annual payouts, even with its recent stock price surge, is good enough to provide the company a projected yield of 3.3%.

While lower lending rates in recent months have somewhat hampered its potential, the eventual end of the Federal Reserve's quantitative-easing effort, coupled with the expectation that lending rates will rise in 2015 and 2016 in connection with the central bank's federal funds rate decisions, should push some prospective homebuyers back into renting. That would only further enhance AvalonBay's already impressive pricing power and lower its minuscule vacancy rate.


Source: Intel Free Press, Flickr.

Big shoes to fill
Chipmaker Intel (NASDAQ:INTC) announced late last week that it will have some big shoes to fill. The company said longtime sales chief Thomas Kilroy, who has been with Intel since 1990 and has held his executive post since 2005, will not resume his position once he returns from medical leave. An Intel spokesman noted that while Kilroy's health is recovering, he no longer has the desire to make the extensive travel associated with his job.

This could be a potentially big blow to Intel if it doesn't find a solid replacement for Kilroy, who said he'll stay on in an advisory role during the transition. Kilroy has been integral in maintaining Intel's relationships with its largest server and PC customers, so losing his expertise could translate into choppier waters for the processing giant. I wouldn't say this is a reason to sell Intel, but it's certainly a looming challenge worth keeping an eye on.

Ford's auto "Edge"
It was a busy week for automaker Ford (NYSE:F), perhaps highlighted by the unveiling of the company's all-new crossover SUV, the Edge. As Foolish auto specialist John Rosevear noted last week, the exterior of the Edge may look somewhat similar to previous models, but the vehicle incorporates a number of new technologies in the cabin that should appeal to a broader swath of consumers. Also, it's being geared for success in foreign markets such as China and throughout Europe, where smaller SUVs and crossovers are hot-ticket items. 

2015 Ford Edge, Source: Ford.

Ford CEO Alan Mulally also noted in an interview on Bloomberg TV last week that he plans to remain in close contact with his successor, Mark Fields, after stepping down from his chief executive role next month. By acting as a strategic advisor, Mulally can calm investors who might worry that Ford intends to divert from its successful path. It's still going to be a nervous first couple months for Ford shareholders, but from the outside looking in I believe Fields has every tool necessary to be a successful CEO for the automaker.

NextEra's IPO shines
Finally, alternative energy-focused electric utility NextEra Energy (NYSE:NEE) has to be grinning from ear to ear after its IPO of subsidiary NextEra Energy Partners (NYSE:NEP) performed beautifully in its first day of trading on Friday. Shares priced at the upper end of the $23-$25 per-unit range and soared 28% on the day, raising more than $400 million in its debut.

NextEra Energy Partners, which owns a number of wind and solar products, will use some of its proceeds to buy units of NextEra Energy Operating Partners and for general corporate purposes, with the rest of the funds being used to purchase units of NextEra Energy Operating Partners from a NextEra Energy affiliate. This IPO is all about NextEra generating new cash without taking out more debt or diluting investors, and it seems to have worked beautifully.

Interested in more high-yield stocks? Take a gander at these recent top picks from our analysts! 
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 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.

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.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

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. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

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."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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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