Stocks to Buy With Your Mega Millions Windfall!
In case you have not heard, lottery fever is sweeping the country after Tuesday's Mega Millions drawing failed to produce a winner. The jackpot has now swelled to a record $540 million and is likely to soar even higher by Friday's drawing, which will take place at 11 p.m. EST. If you are interested in a chance to become absurdly wealthy overnight, be sure to buy tickets.
Someone out there is walking around completely oblivious to the windfall that is about fall into their lap. It could be you. Of course, if you do beat the roughly 175 million-to-one odds, you will have a whole new set of problems on your hands. For example, where do you invest that kind of money?
Historically, the stock market has been one of the best long-term investments, and with your Mega Millions riches you will be able to buy a ridiculous amount of stock. Below, Benzinga takes a look at some companies that might make attractive investments for the lucky winner. First, however, let's take a look at exactly how much money you will be collecting if your numbers come up.
The annuity option, which is paid out in 26 annual installments, is worth $540 million. Given the long-term downtrend in the U.S. Dollar, however, and the affinity that Federal Reserve Chairman Ben Bernanke has for money printing, the lump-sum payout is probably a better alternative to the annuity. If you choose to accept your winnings in a lump-sum, lottery officials will be handing you a check for around $389 million - before taxes.
That figure will be whittled down by approximately a third by the tax man, so you can expect to collect a little more than $259 million if you become the record setting lotto winner. What can $259 million buy you in the stock market? Let's find out. Here are some blue-chip, high quality companies that could make the next Mega Millionaire even richer.
Apple (NASDAQ: AAPL) - The world's largest company has a market cap of roughly $569 billion. Unfortunately, your $259 million is paltry compared to the size of Apple. In fact, if you invested your entire windfall in the company, you would only own 0.000455% of the technology behemoth. That works out to around 424,688 shares as of Thursday's closing price of $609.86. While that might not seem like a lot, it would make you the largest individual direct holder of Apple shares, according to data taken from Yahoo Finance. Currently, the largest direct holder is board member and former Apple employee Ron Johnson, who is now the CEO of J.C. Penney (NYSE: JCP). He owned 232,875 shares as of the last reporting date. Another way to look at this investment is that you would make $424,688 every time AAPL rose $1. Over the last month alone, AAPL has risen roughly $70, which would have produced a profit of almost $30 million for the month. Not too bad.
Starbucks (NYSE: SBUX) - The coffee giant had a market cap of $42 billion as of the close of trading on Thursday. If the lucky Mega Millions winner sinks their fortune into SBUX shares, they could purchase around 0.0061% of the company. This would work out to around 4,647,407 SBUX shares. The largest direct holder in Starbucks is Howard Schultz, the company's founder and CEO. He owns around 17.6 million shares, which would dwarf your stake. The good news, however, is that you would be the second largest direct holder in the company after Mr. Schultz. If nothing else, your investment would probably buy you a cup of coffee and a chat with the CEO. Also, with shares rising $7 over the last month, you would have bagged a cool $32.5 million in capital gains. Furthermore, SBUX currently yields 1.22%, so you would also be collecting annual dividend payments of $3.16 million.
Nike (NYSE: NKE) - As of the close of trading on Thursday, Nike had a market cap of $49.5 billion. Therefore, $259 million would buy you around one half of one percent of the company - 0.0052% to be exact. This would work out to 2,401,483 NKE shares. A stake of this size would make you by far the largest direct holder of NKE stock. The CEO, Mark Parker, only owns 274,684 shares according to Yahoo Finance. How cool would that be? With this size of a position in the company, you could probably call Mark Parker up whenever you felt like it and talk about the business. While the shares are down very slightly over the last month, you would have made around $25 million in the last 3 months. In addition, with NKE yielding 1.34%, you would be collecting annual dividend checks of roughly $3.47 million.
Although your financial adviser may have a heart attack if you tell him that you want to plow all of your Mega Millions winnings into one or two stocks, the idea is certainly better than going on an epic spending binge on perpetually depreciating assets. Furthermore, if you are not satisfied with $259 million in cash, and want to make it onto the list of the world's billionaires, this strategy is your best bet for making it happen.
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