Last summer, I attended a Coldplay concert held at Miami’s Hard Rock Stadium, home of the Miami Dolphins.
For over 150 minutes, lead singer, Chris Martin, and band members gave the audience an incredible performance. The return on investment was unreal, as I remember the experience close to a year later (and will for a long time), as the best show I’ve ever attended.
It was only 150 minutes, though. For the rest of that week, the other 10,080 minutes, life went on pretty normally. Most of life isn’t made up of Coldplay concert-like adrenaline rushes; otherwise, we wouldn’t even know what a rush is.
Life, on a day-to-day basis, is about improving on three fronts – physically, mentally, and spiritually, by rooting-out bad habits and replacing them with good ones.
Life is an inner race, which isn’t pure entertainment, as I’m sure you’ve learned by this point.
As with life, investing also has its high-flyers; the stocks, which have the potential to become a world-class occurrence, can generate insanely high returns on investment, but they are extremely rare. Most companies are not exciting and require tremendous amounts of research to uncover hidden gems.
Today, I am going to shock you, not because Portfolio Wealth Global will reveal a company poised to receive an FDA approval on a patent to cure cancer, but because, hidden in plain sight, one of the world’s slowest turtles, a business you’d never think could outperform young stallions, is offering up beautiful prospects for double-digit returns.
AT&T has a current yield of 6.4%. Not many companies can pay up that much.
As you may know, it is waiting for the finalizing of its pending acquisition of Time Warner, which is a media powerhouse with assets like TBS, TNT and HBO.
If the Trump administration doesn’t veto the deal, the merged behemoth would have over 130 million mobile subscribers, with an additional 45 million video subscribers.
5G is a highly political event, and soon we will know what the justice department decides on the matter.
Due to this over-hanging cloud, though, the stock trades for a P/E ratio of only 9.1, close to 33% lower than its decade-long average.
Put differently, to get back to historical valuations, the stock price could increase by 8.11% over the next decade, annually, as the pendulum swings back. This is unique for such a big company.
Remember, the company will also be paying this generous dividend on top of this growth expectation, so put together, you’re looking at 6.4% + 8.11%, for a total of 14.15%.
AT&T is a cash cow that continues to buy back its own shares. I estimate the rate to be 0.9% annually, and I have a modest growth expectation of 2.4%, so that’s another 3.3% right there.
Stack this all up, and you’re looking at a return that beats every investment sector, which doesn’t experience a meteoric rise, but with much reduced risk. Again, AT&T can deliver a 17.81% gain, annually, for the next decade. That’s enormous.
It’s definitely not going to make you refresh your brokerage account screen every second with excitement, but if you patiently reinvest those fat 6.4% a year dividends, you’d be a happy camper in ten years.
Many things could happen from now until 2028, but one thing I do know, AT&T will be with us.