Doc's note: In today's essay, part of our best of Retirement Millionaire Daily series week, we're talking about one of the easiest ways to generate safe, steady retirement income.
Imagine walking the streets of New York City in the early 1900s.
If you looked up, you could barely see the skyline. But not because of tall buildings – the world's tallest was the Metropolitan Life Tower at only 50 stories tall. The reason: Tens of thousands of electrical wires lined the streets.
In the early days of electricity, small, unregulated power generators competed with each other for customers. Confusion reigned as demand grew for lighting and other luxuries that electricity promised. In New York alone, the market churned constantly as hundreds of startup providers with redundant networks came and went. Consumers couldn't be sure who would provide the power from month to month or at what price. Decades later, monopolies (regulated by the government) provide power to the majority of end-users.
A similar process has happened in the digital age. Little more than a decade ago, Internet users could choose from among 10 different search engines to surf the web. Today, just a couple compete for that role. Fifteen years ago, consumers could work from multiple (and incompatible) word processing packages.
Today, you can find only a couple (and arguably only one). Consolidations and mergers have led to a handful of "Digital Utilities." Each company is a dominant player in its sector...
Traditional utilities have been a cornerstone of retirement investing. They are considered safe-to-buy businesses that supply electricity and natural gas to every household. And utilities throw off cash dividends that can supplement a retiree's income. I've owned a few utilities in my investment career, each of which supplemented my cash flows well.
But today we're looking at a new type of utility business – Digital Utilities.
These companies enjoy the same kind of monopoly position on a vital service as old-school power and water companies. But these new utilities are even better than conventional utilities. Old-fashioned utilities were limited by geography – for instance, a power company in Baltimore wasn't going to open a branch office in Toronto.
But nothing constrains these new Digital Utilities. They are international in scope. They can sell their vital services anywhere in the world. Even better, they're lightly regulated. Their pricing power is unlimited. So their growth potential (and their stocks' prospects for capital gains) is wide open... and at the same time they pay safe, reliable income – just like a utility.
And just like an old-school utility, these companies are vital to our way of life. In fact... every time you turn on a computer, you're paying them...
Moreover, they sell their goods and services around the world, so local government regulators can't control them. Regulators can't limit their profits, prices, and return on capital the way they control traditional utilities.
The information flow through the Internet and airwaves is the new electricity and gas of this century – it's the new world of Digital Utilities.
You've seen their names before... companies like Oracle, Qualcomm, and Intel. They have products we use every day. Every time you use the computer on your desk at home, the cell phone in your hand, or your favorite search engine... these businesses collect a little more money.
And, thanks to the current bull market, many Digital Utilities have seen their stocks skyrocket. That's made many of the companies expensive.
Longtime readers know I like finding deals... I want to invest in safe, shareholder-friendly companies without overpaying for them.
I recently wrote about one of my favorite Digital Utilities in my monthly advisory, Retirement Millionaire.
Some people call this company a cartel. It owns and profits from every single generation of mobile technology. And recent pessimism is giving us an incredible opportunity to buy.
To find out more on how to claim your fair share of this tech giant, click here. Current Retirement Millionaire subscribers can read all about it here. And if you'd like to learn how to become a lifetime subscriber to Retirement Millionaire so you never miss an opportunity like I'm seeing now, click here.
Are you living a millionaire lifestyle? Our free daily letter is your guidebook:
- What happened to these once popular search engines?
- Something different: Can you survive on just one food?
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Retirement Millionaire Daily Research Team
August 30, 2017