First the signing, then the bragging: politicians on both signs of the aisle are now going to claim credit for the biggest infrastructure package in U.S. history. Once again, the government is doing what it does best: spend money like there’s no tomorrow.
And now that Joseph Biden has signed his name on the $1 trillion bill, it officially becomes the law of the land and of course, he’ll cite this as an achievement during the next election cycle, even though it was a bipartisan effort.
That aside, it’s a law now and Americans deserve to know where their money’s being spent. Just as importantly, we should consider how this spending package will impact our wealth-building strategy.
One thing that can be said in favor of the bill, is that it does actually allocate some funding towards infrastructure. For example, $73 billion will be earmarked for America’s electricity grid, including upgrades to the country’s power systems.
There’s no need to make any major changes based on this, as it’s always been a smart idea to put a handful of utilities companies in your portfolio and that’s not going to change anytime soon.
That’s because utilities companies like Duke (DUK), Southern (SO), Dominion (D), and Consolidated Edison (ED) are excellent dividend payers. They won’t make you wealthy overnight, but you can enhance your returns over time through the power of compounding with these stocks.
$66 billion will be allocated towards America’s railways. This includes a significant investment in Amtrak, which doesn’t have a publicly tradable stock.
However, there’s also funding for new rail lines and upgrades to existing ones. This could make railroad-industry mainstays like Union Pacific Corporation (UNP) and CSX Corporation (CSX) worthy additions to your portfolio.
Next, $65 billion will be spent on broadband connectivity, including funding to provide high-speed Internet access to hard-to-reach populations. Some rock-solid picks in this niche include Broadcom (AVGO), Comcast (CMCSA), Verizon (VZ), and AT&T (T) – look for some nice dividends in the telecom sector.
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Moreover, $47 billion will be dedicated to climate resiliency and an additional $21 billion for environmental projects. Don’t be surprised if more bills are passed in the near future to increase these figures substantially.
To get a jump on this opportunity, you might look into solar companies like Sunworks (SUNW), which makes and sells photovoltaic based power systems, and SolarEdge Technologies (SEDG), which makes and sells semiconductor equipment to firms who develop solar photovoltaic installations.
For something more diversified, you could try Brookfield Renewable (BEP), which operates 20 gigawatts of renewable energy generating capacity, including solar, wind, hydroelectric, and energy-transition assets.
And here’s where all investors should really pay attention: $7.5 billion will be spent to build a national network of charging stations for electric vehicles.
Sure, you could capitalize on this through a direct investment in charging-station manufacturers like ChargePoint (CHPT) and Blink (BLNK).
But along with that, investors should acknowledge the commodity that will be needed for electric vehicles and their batteries: silver.
Silver is already reaching peak production, meaning that silver mining companies will be called upon to ramp up their exploration activity. Silver will become as precious as it’s ever been, as the automotive market will become increasingly dependent on it.
Besides, if the government (i.e., the taxpayer) is funding a national charging network build-out, this should incentivize electric-vehicle production. Again, this means that more silver will be needed over the coming years.
It’s just another reason to convert some of your dollars – which $1 trillion in spending will put a whole lot of negative pressure on – into precious metals, a store of wealth that will only grow in value.
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