Li Lu, the money manager for Charlie Munger, liked Samsung preferred stocks in particular and South Korean preferred in general as they are traded at a deep discount to common stock. The cheapness was due to the irrational perception that they were not debt or equity. In the Korean market, while Samsung common is trading at 1,342,000 Korean won, its preferred stock is only 840,000 Korean won which is a nearly 40% discount to the common share price.
Apple with its potentially high total yield
Apple Inc. (NASDAQ:AAPL) could also make a good compelling investment case. The company recently took advantage of the low debt financing by issuing $17 billion in bonds with a rate equivalent to the highest-rated AAA companies in the world, ranging from 0.511% to only 3.883%. By using its cash on hand and recent debt financing, the company intends to return $100 billion in cash in the next two years via dividends and share repurchases. It has already announced raising its share buyback amount by $50 billion to $60 billion, while increasing its dividend to $3.05 per share. At the current trading price, Apple’s dividend yield is quite juicy at 3%.
My Foolish take
All three of these tech giants, Apple Inc. (NASDAQ:AAPL), Samsung and Blackberry, could fit well in the long-term portfolios of technology investors. Apple could potentially produce a total yield at 26.8%, including buybacks and dividends, in the next two years if it executes its $100 billion cash return plan. While investors could view profitable Samsung, the global leader in smartphone industry, is quite cheap due to its quite low EBITDA multiple, Research In Motion Ltd (NASDAQ:BBRY) could be seen as a turnaround play with the backup of one of the most successful investors in the world, Prem Watsa. To conclude, Francis Chou once commented that Blackberry’s patents alone were already worth more than $13 per share, 30% higher than its current trading price.
The article Three Smartphone Companies for Your Tech Portfolio originally appeared on Fool.com and is written by Anh Hoang.
Anh HOANG owns shares of Apple and Research In Motion Ltd (NASDAQ:BBRY). The Motley Fool recommends Apple. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL). Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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