Now that NLS is getting a fitness portfolio together, rather than being a one hit wonder... my bet is that they do grow earnings substantially in that time frame. Even if at a fraction of what they've done since they became public, the value in the stock should far surpass any fixed income vehicle... which really isn't saying a whole lot... but in a two horse race, I know which one I'd be riding.
Shrug. Even if anybody were dumb enough to pay rjr, I wouldn't worry about it. The problem, in my opinion, is that the stock is fully valued. Why pay $22 for $1 in uncertain future earnings -- about 4.5% of your investment -- when the US Treasury is offering 4.3% for ten years with absolute certainty?
Well, it is only absolutely certain if you hold for that term. I'm not a big inflation hawk, but clearly 4.3% is historically low. Should rates rise, as the Fed seems to be trying to coerce as they continue to hike the overnight rate, you will lose value in your investment.
So unless you are willing to invest it and hold it for the time frame, then at best, you will outpace anticipated inflation by less than 2%.
The inflation hedge for NLS is the dividend... any stock price growth over the next 10 years would be pure capital expansion. So to match the 10 year note, the price for NLS stock in the year 2015 would have to be around $27, should the dividend remain unchanged.