By: Dividend Sensei
Microsoft is one of the highest quality companies on earth, and Satya Nadella is one of the greatest CEOs in history.
Microsoft is as close to a “must own, buy and hold forever” blue-chip as exists on Wall Street. Analysts expect 12.6% CAGR long-term returns, better than the Nasdaq’s 11.3% CAGR.
However, today it’s 56% overvalued compared to the Nadella era norms, meaning that MSFT is a relatively poor place for new money today.
In contrast, these two faster-growing blue-chips are 10% to 30% undervalued and expected to grow 21.2% to 31.3% CAGR, much faster than MSFT’s 11.8% CAGR.
This means that these tech blue-chips if combined with a high-yield blue-chip like BTI, could deliver 3X the risk-adjusted expected returns of MSFT as well as 20% to 27% CAGR returns over the next five years. Just as they’ve done since 2013, and all while you enjoy a safe 4.1% yield.