April 8, 2012 in Business

Motley Fool: Portfolio may benefit from an Intel infusion

 

If you want to invest in the future of technology, you need to consider the world’s largest semiconductor manufacturer, Intel (Nasdaq: INTC). Its market share in microprocessors, desktop processors, mobile processors and server processors tops 75 percent in each category. It doesn’t have much of a presence in smartphone and tablet processors, but it’s addressing that shortly, though some fear it may be arriving too late to the party.

There’s a lot to like about Intel. While many technology companies pay no dividend, needing to plow any excess cash into fueling growth, Intel was recently sporting a 3.1 percent dividend yield, and it has been hiking its dividend by more than 25 percent annually, on average, over the past 15 years. It can afford to, with roughly $15 billion in cash and short-term investments on its balance sheet.

It’s investing heavily in its future, as well, beefing up its research and development spending significantly in recent years. It has announced, for example, that it’s dedicating $100 million toward accelerating the development of technology in the auto industry. And along with IBM and others, Intel is investing $4.4 billion over five years to create a semiconductor R&D hub in New York to develop next-generation chip technology.

(The Motley Fool owns shares of Intel, and our newsletters have recommended it as well.)

Ask the Fool

Q: What’s the S&P 500? – C.B., Lima, Ohio

A: It’s an index of 500 of America’s biggest companies, selected by the folks at Standard & Poor’s. Though the U.S. stock market encompasses thousands of companies, these 500 together make up more than 75 percent of the market’s total value.

The companies mostly have market capitalizations of at least $4 billion, and include names such as 3M, Alcoa, Best Buy, Boeing, Caterpillar, Corning, Dell, Estee Lauder, FedEx, Ford, Gap, Goldman Sachs, Harley-Davidson, Hasbro, International Paper, Kellogg, Kroger, McDonald’s, Oracle, PepsiCo, Schwab, Southwest Airlines, Target, Visa, Whirlpool, Whole Foods Market and Xerox.

Companies removed from the index in the past few years include RadioShack and Eastman Kodak, while those added include Chipotle Mexican Grill, Netflix, Dollar Tree and priceline.com.

You can invest in the S&P 500 easily via an index fund such as the low-cost Vanguard 500 Index. Learn more at fool.com/mutualfunds /mutualfunds.htm.

My dumbest investment

I invested money in an option recommending service and actually almost broke even. I became suspicious that its recommendations were being “sold” too aggressively after a couple of small wins, so I stopped following any more advice. I recently heard from a government fraud department that the company’s principals were being charged with just that: fraud. – C.B., Peterborough, Ontario

The Fool responds: When receiving financial advice, watch out for anything that smells fishy, such as big promises and guaranteed returns. Our friends at the Securities and Exchange Commission offer tips about newsletters and fraud here: sec.gov/investor/pubs/ cyberfraud/newsletter.htm. They note that some advisers are paid to promote various investments and that they’re required to disclose such arrangements. Some may break the law and not disclose, but others may offer vague or hard-to-find disclosures. Other advisers may be quietly invested in what they recommend.

You can check with the SEC to see if a newsletter has ever gotten in trouble. The SEC also warns: “Don’t invest in small, thinly traded companies unless you’re prepared to lose every penny.”


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