What's better for you a happy meal, or an Apple?
Hello fellow Fools,
I hope everyone is enjoying Mothers day. We had a nice brunch followed up by frisbee in the backyard. But thats not why I'm writing this blog.
I'm writing this because I gave my niece and nephew a homework assignment-
Pick a corporation with a huge moat (I gave the investopedia definition of moat) that will still be around in forty years. $1,000 invested
My nephew picked Apple, seems like a nice safe pick, but I have one problem with this. No Dividend. I work under the assumption that Mr Market is my schizophrenic next door neighbor (props to Ben Graham) So how could I value what a thousand dollar investment would be worth in forty years?
My neice picked Mcdonalds (I was quite proud that she picked a dividend aristocrat)
So I typed in the #'s to my handy dandy dividend calculator-
Starting yield- 2.80%
dividend growth rate- 17.45% (o.k this is probably where I made a mistake, I used the 5yr growth rate from TMF) Should I be typing in another number?
Number of shares held- 10.8873992
Cost pr/srh- $91.90
years to hold- 40.
I KNOW!! THATS INSANE. How much money is that, gotta be close to the national debt.
I just wanted to point out to them that time,time time is on their side, yes it is.
Thanks in advance for all replies.Especially those that show my calculations to be correct or incorrect, and anyone who can make the case for Apple over a forty year timeframe. (just remember that kids will be reading this:)
Cheers and if you have'nt already go hug your Mother.