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The 'Forever' Investment Rockefeller Would Probably Own Today
6/5/2013 12:30:00 PM
He is the richest person in history.
Warren Buffett ? At his peak, Buffett'swealth is 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 forinflation ) amassed by a name synonymous with wealth: John D. Rockefeller.
But when I tell you I've found what Icall my "Rockefeller"investment , I'm not saying it because I think itwill 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.
Thisstock 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 through his company, Standard Oil. And while I want to invest in the same sort of business that 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 itsmarket ... while also paying a fatdividend on theshares 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 tocapital gains , it pays investors a 4.4% dividend eachyear to own it.
In total, about 85% of thepartnership 'srevenues are under contracts or are regulated. Meanwhile, those practically guaranteed revenues are 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 that no one can compete with. 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 $0.43 per unit each quarter. That's a 56% increase over just the past two years.
But I think thatyield 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 itsincome to investors in the form of dividends. In the most recent quarter, Brookfield paid just 59%. I'm predicting the company will raise its distributions in the coming months to reach its targetpayout ratio .
It's pretty obvious to see that I like BIP, but I will admit -- I am biased. Brookfield Infrastructure is one of my "10 BestStocks to Hold Forever," and I also hold shares in my $100,000 real-money portfolio for Top 10 Stocks .
Action to Take --> That's 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.