By Paul Tracy
The Richest Person in Modern HistoryA "Rockefeller" Stock
The Dividends Come Rolling In
Editor's Note: In today's Cabot Wealth Advisory, you'll hear from Paul Tracy, a co-founder of StreetAuthority and chief investment strategist of StreetAuthority's Top 10 Stocks. Paul discusses a stock that reminds him of the businesses that made John D. Rockefeller rich. I hope you enjoy his issue!
He is the richest person in modern history.
Warren Buffett? At his peak, Buffett's wealth was less than one-fifth this man's fortune.
Bill Gates doesn't even come close. Neither does Wal-Mart founder Sam Walton or telecom magnate--and current richest man in the world--Carlos Slim.
None of these men can hold a candle to the $336 billion fortune (adjusted for inflation) amassed by a name synonymous with wealth ... John D. Rockefeller.
But when I tell you I've found what I call my "Rockefeller" investment, I'm not saying it because I think it will make us billionaires--even though I'd love to be able to say that.
No, I call it my "Rockefeller" investment because of what this company invests in.
This stock owns a rare breed of assets that are nearly impossible for small investors like you and me to purchase directly. Typically, only major companies or industrial titans like Rockefeller can buy them.
Most people know Rockefeller became rich via his company, Standard Oil. And while I want to invest in the same sort of business he did, my "Rockefeller" pick has nothing to do with oil.
But that's fine by me, because when you look closely at exactly WHY Rockefeller got rich, you realize Standard Oil didn't turn Rockefeller into a billionaire simply because it was in the oil business.
No. Standard Oil made Rockefeller the richest man in history because the company held a monopoly in its market ... while paying a fat dividend on the shares he held.
And now, I've found an investment--Brookfield Infrastructure (BIP)--that lets you own stakes in dozens of infrastructure monopolies across the entire world. And in addition to capital gains, it pays investors a 5.4% dividend each year to own it.
In total, about 80% of the partnership's revenue is under contracts or is regulated. Meanwhile, this practically guaranteed revenue is coming from one of the most compelling portfolios I've ever seen.
The partnership has a stake in electric grids in Chile. It holds railroads in Australia ... ports all over Europe ... coal facilities in Australia ... toll roads in South America ... and timberland in the United States and Canada. These are assets with which no one can compete. A competitor isn't going to build another electric grid or a new port.
I can only think of one, maybe two, other places where you can invest in a stable group of monopolistic holdings this broad from all over the planet.
But any "Rockefeller" idea would be incomplete if it ignored dividends. After all, it was Rockefeller who once quipped "Do you know the only thing that gives me pleasure? It's to see my dividends coming in."
Right now, BIP pays $0.35 per share each quarter. That's a 27% increase during just the past 10 months and gives the shares a yield of 5.4%.
But I think this yield is going to rise. Not only does Brookfield explicitly state its aim is to raise its distributions 3% to 7% a year, but it also aims to return 60% to 70% of its income to investors in the form of dividends. In the most recent quarter, Brookfield paid just 50%. I'm predicting the company will raise its distributions in the coming months to reach its target payout ratio.
This is not to say there isn't any risk of owning BIP. In the market sell-off, it fell too, although not as much as the broader market ... and it rebounded quickly. But if you're looking for a long-term holding that pays a solid dividend, I think Brookfield Infrastructure is worth further research.
All the best,
StreetAuthority Co-founder and Chief Investment Strategist, Top 10 Stocks
P.S. It's pretty obvious to see that I like BIP, but I will admit--I am biased. Brookfield Infrastructure is one of my "10 Best Stocks to Hold Forever," and I also hold shares in my $100,000 real-money portfolio for Top 10 Stocks. Click here to learn more.