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Waste Management, Inc. (WM), Chevron Corporation (CVX), The Procter & Gamble Company (PG): The Basic Needs Portfolio

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Nearly three months ago I announced my intention to create a portfolio that embodied life’s basic needs. Understandably, many of the truly basic needs in our everyday lives have transcended far beyond just the need for water and shelter. To that end, over the past 10 weeks I’ve detailed 10 diverse companies that I feel will outperform the broad-based S&P 500 over the long run because of their ability to outperform in both bull and bear markets, and command incredible pricing power in nearly any economic environment.

If you’d like a closer look at what my reasoning was behind each selection, I would encourage you to review them before reading on:

Waste Management

Intel

NextEra Energy

MasterCard

Chevron

Select Medical

Ford

American Water Works

Procter & Gamble

AvalonBay Communities

Today will mark the beginning of trading for this Basic Needs portfolio. As a reminder, all dividends received will collect as cash, one-time commission costs will count against the portfolio, and these stocks will be held (no trading allowed!) for a period of three years. I plan to update this portfolio every Monday to track its progress with the intent on showing how stable an influence basic needs stocks can be for your investment portfolio — and your sleep!

Let’s have one final look at the investment portfolio:

Company Cost Basis Shares Total Value Forward P/E Dividend Yield
Waste Management
$42.60 23.24 $990.02 17.8 3.4%
Intel $23.22 42.64 $990.10 11.7 3.9%
NextEra Energy $87.94 11.26 $990.20 16.6 3%
Mastercard $645.57 1.53 $987.72 21.1 0.4%
Chevron $124.95 7.93 $990.85 10.2 3.2%
Select Medical $8.96 110.49 $989.99 9.3 4.5%
Ford $17.50 56.57 $989.98 10 2.3%
American Water Works $43.13 22.96 $990.26 18.1 2.6%
Procter & Gamble $81.29 12.18 $990.11 17.4 3%
AvalonBay Communities $133.95 7.39 $989.89 19.5 3.2%
Cash $0.88
Dividends receivable $0
Total commission ($100.00)
Original investment $10,000.00

Source: Yahoo! Finance.

Each week from here on out I’m going to highlight the week’s biggest stories, movers, and dividends. But since this is the inaugural week — and we’ll start down 1% because of commission costs — let’s just take a look at five interesting news events, primary earnings-driven, from the past week.

Refuse giant Waste Management, Inc. (NYSE:WM) reported its second-quarter earnings results on Tuesday and unfortunately missed the Street’s EPS estimates for a third straight quarter. The results weren’t nearly as poor as they sound, though, with revenue jumping 2% to $3.53 billion and EPS improving 16% from the year-ago period. Its biggest challenge was a decrease in commodity pricing, which reduced recycling volumes. However, over time I see this as a minimal concern as socially responsible lifestyles become more mainstream. The good news? Waste Management, Inc. (NYSE:WM)’s pricing power remains solid and it should be able to exact rate increases across the board when needed.

Sticking with the earnings theme, oil giant Chevron Corporation (NYSE:CVX) reported its second-quarter results on Friday. Like Waste Management, Inc. (NYSE:WM), the numbers on the surface failed to impress. Total income fell year over year to $5.37 billion from $7.21 billion, with revenue down $5 billion to “just” $55 billion for the quarter. Chevron Corporation (NYSE:CVX) blamed its weak results on exceptional strength from its downstream businesses in the year-ago period, and maintenance repairs to its refineries during the past quarter. On the bright side, Chevron Corporation (NYSE:CVX) remains on track to be a gigantic liquefied natural gas player with its Angola and Australian projects coming right along. Chevron Corporation (NYSE:CVX) also declared a $1 quarterly dividend payable on Sept. 10 just days earlier.

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