Warren Buffett famously quipped that if you aren't willing to own a stock for 10 years, you shouldn't think about owning it for 10 minutes. That doesn't mean that it's never a good idea to sell a stock or that you shouldn't reassess your holdings in light of new information. But that piece of investing wisdom from the Oracle of Omaha emphasizes the importance of focusing on high-quality companies with characteristics that will allow them to thrive over the long term.
Strength in content and the ability to distribute it directly to consumers are two advantages that I think will help well-positioned companies deliver market-beating returns over the next decade. AT&T (T -0.19%), Take-Two Interactive (TTWO 0.66%), and Walt Disney (DIS 0.01%) all fit that mold and constitute a substantial percentage of my overall holdings, and I think each one stands out as a worthy buy for long-term investors.
It might sound a bit strange to name AT&T as a stock that's worth buying and holding long term when performance over the last 10 years has admittedly been lackluster. Shares have gained just 34% over the last decade -- a period that has seen the S&P 500 more than triple. However, the telecom giant's great dividend, underappreciated business strengths, and nonprohibitive valuation make its stock worth buying and holding for the long haul.
The company's DIRECTV satellite television business is shedding subscribers amid the big cord-cutting transition, and an increasingly competitive environment in the mobile wireless space has meant that AT&T has needed to ramp up the quality of its service packages without being able to implement big price increases. This dynamic has led to very slow growth for the business. However, soggy performance has pushed the stock to trade at low multiples and elevated its dividend yield to an appealing 6.4%. It trades at roughly nine times this year's expected earnings.
The acquisition of Time Warner has made AT&T a global leader in original content by bringing television, film, and video game production units into the fold. The company is also on track to play a leading role in 5G wireless networks that will allow dramatic advancements in virtual reality (VR) and augmented reality (AR) content, in addition to a wide range of other advancements.
AT&T has a compelling opportunity to pair new and existing forms of media content with its internet services, and benefit from third-party content delivered through its channels -- all while it leverages user data to make video content advertising significantly more effective.
The video game industry has been hit with volatility lately as leading players like Activision Blizzard and Electronic Arts have seen key franchises stumble. Declining performance for some big gaming series and the rise of hugely popular free-to-play competition like Fortnite have caused some analysts and industry watchers to wonder whether the gaming's big players are being disrupted. Take-Two is among the major Western publishers to see big shake-ups stemming from the video game industry pullback, with shares trading down roughly 9% over the last year and 17% lower from the high they hit last summer.
While Activision and EA each have had notable recent stumbles that help explain why their share prices have taken significant dives, Take-Two's games have actually been putting up encouraging performance. Its stock declines seem to have more to do with challenges impacting its competitors, and the fact that investors are taking a more cautious stance on the overall industry.
Take-Two has shown that it can create and manage entertainment franchises that go the distance. And the rise of digital distribution means that it increasingly sells titles and content updates directly to consumers without relying on retail middlemen like GameStop and Walmart. The company's Grand Theft Auto series has been setting sales records since Grand Theft Auto III revolutionized the open world-action genre in 2001. Grand Theft Auto V (first released in 2013), which still shows up on North America's best-selling game charts, has sold roughly 110 million copies and is now the most profitable entertainment release ever, by some reports. Take-Two's NBA 2K series stands as the best-selling sports-game franchise in North America, and its Red Dead Redemption 2 was the best-selling overall game of 2018 and managed to ship more than 24 million copies less than seven months after its October release.
Its 2017 acquisition of mobile developer Social Point has also been a success, and its mobile team has more than 10 new titles in the works. Take-Two sports a strong franchise catalog, is eyeing new acquisitions in the mobile space, and is looking well positioned to take advantage of digital sales trends and potentially explosive new display mediums like VR and AR. Its stock looks like a top long-term play in the gaming space.
The company's stock is priced at roughly 26 times this year's expected earnings.
Disney has a treasure chest of valuable entertainment brands that's unrivaled the world over -- an advantage that could help the company maintain leadership in its industry and continue to reward shareholders for decades to come. In addition to properties like the Marvel Cinematic Universe, Star Wars, and the Pixar catalog, Disney has acquired Twenty-First Century Fox entertainment assets including Avatar, The Simpsons, and film rights to characters like the X-Men and Deadpool.
The deal also means that television networks including FX and National Geographic are part of The House of Mouse, further improving the company's chances of success in the streaming space. Besides its existing ESPN+ streaming service and the forthcoming Disney+, the company now also owns Hulu. This incredible breadth of content gives the company a good chance of supporting (and bundling) multiple streaming services and emerging as a top player in the space.
Disney's execution won't always be perfect. There's been some fan dissatisfaction with its take on the Star Wars films, weaker-than-anticipated traffic at its Star Wars Galaxy's Edge theme park, and lackluster critical reception for its recent remake of The Lion King. But the company's franchise film model has been very successful on the whole and is enabling the business to trounce its entertainment competitors at the box office and beyond.
The stock also pays a dividend, with shares yielding about 1.3% at current prices. It trades at roughly 22 times this year's expected earnings.