The 20 Best Stocks of the Past 30 Years

7. Home Depot

  • Wealth created: $399.8 billion
  • Annualized dollar weighted return: 16.6%
  • Country: U.S.

Home Depot (HD), the nation’s largest home improvement retailer, has been a publicly traded company since 1981. It was included in the S&P 500 index in 1988 and added to the Dow in 1999.

As great a wealth creator as HD has been, the bulk of its outperformance has come in only the past decade or so. The collapse of the housing market that precipitated the Great Recession of the late 2000s was a painful period for Home Depot.

Its resurgence on the back of low mortgage rates – coupled with a shortage of new housing, which prompted homeowners to stay put and renovate, and, more recently, the pandemic – is what truly made investors’ fortunes. Including dividends, shares in Home Depot rose about 1,240% over the past decade, according to data from YCharts. The S&P 500 generated a total return of 373% over the same period.

Wall Street typically ranks HD as one of its favorite Dow stocks, with analysts expecting even more outperformance in the years ahead.

6. JPMorgan Chase

  • Wealth created: $414.1 billion
  • Annualized dollar weighted return: 9.8%
  • Country: U.S.

JPMorgan Chase (JPM) traces its roots all the way back to 1799, when The Manhattan Company was chartered to supply clean water to New York City.

It has come a long way since.

Today’s JPMorgan Chase is a sprawling multinational financial powerhouse that ranks as the nation’s largest bank by assets. Thanks to decades of mergers and acquisitions, the bank boasts more than 1,200 predecessor institutions, including Chase Manhattan Bank, Bank One, Manufacturers Hanover Trust, Chemical Bank and Bear Stearns, just to name a few.

Then known as J.P. Morgan & Co., the stock was added to the Dow in 1991 to reflect not only its place of prominence in the financial industry, but its weight in the American business landscape.

The company name changed to JPMorgan Chase in 2000 after J.P. Morgan & Co. merged with Chase Manhattan. Acquisitions, a well-regarded management team and strength across a wide range of financial businesses has allowed JPM to generate more than $414 billion in wealth for shareholders over the past three decades.

5. Exxon Mobil

  • Wealth created: $437.1 billion
  • Annualized dollar weighted return: 10.7%
  • Country: U.S.

The future looks to be very different from the recent past for Exxon Mobil (XOM). After all, the outlook for fossil fuels and its relevance to the U.S. economy has changed radically since 1990.

Exxon Mobil’s removal from the Dow Jones Industrial Average in 2020 only underscored this new reality.

Nevertheless, the integrated energy giant sure had a heck of a run. Over the past 30 years, amid cycles of oil booms and oil busts, XOM generated more than $437 billion in wealth. Shareholders can thank the company’s policy of regular dividend increases for much of that windfall. Exxon Mobil’s dividend payments have grown at an average annual rate of 6.1% over the last 38 years.

Here’s how that’s relevant: from 1990 to 2020, XOM stock gained 230% on a price basis alone. Add in the dividends, however, and XOM’s total return came to 808%.

XOM might not repeat as a top stock of the next 30 years, but it could still be a solid buy-and-hold pick if the dividend hikes keep coming.

4. Procter & Gamble

  • Wealth created: $451.1 billion
  • Annualized dollar weighted return: 13.1%
  • Country: U.S.

Procter & Gamble (PG) is another consumer products stock that created outsized wealth for shareholders over the past three decades – even as tech stocks got all the glory.

Partly that’s due to the Dow component’s defensive characteristics. Demand for products such as Charmin toilet paper, Crest toothpaste, Tide laundry detergent, Pampers diapers and Gillette razors tends to remain stable in both good times and bad. Well more than 60 consecutive years of annual dividend hikes – PG is a member of the S&P 500 Dividend Aristocrats – also helped smooth out the ups and downs of the business cycle.

And make no mistake about how important those rising payouts have been to shareholders’ returns. From 1990 to 2020, PG rose 1,500% on a price basis. Include dividends, however, and PG’s total return balloons to 3,290%. The S&P 500’s total return came to 1,950% over the same period.

3. Nestlé

  • Wealth created: $478.1 billion
  • Annualized dollar weighted return: 13.2%
  • Country: Switzerland

Speaking of consumer products stocks, none has created more wealth over the past three decades than Switzerland’s Nestlé (NSRGY).

It’s also no coincidence that the world’s largest food company by revenue is a dividend stalwart. This European Dividend Aristocrat has a quarter-century of stable or rising payouts to its name.

A period of intense international growth from 1990 to 2011 made the sprawling packaged food conglomerate what it is today. Its brands are legion, and approximately 30 of them boast annual sales of at least $1 billion. The company’s biggest hitters include Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel and Maggi.

Consumer staples stocks like Nestlé are defensive in nature and tend to lag in up markets. But they also tend to hold up better when the cycle turns. Nestlé serves as proof that when held patiently over several market cycles, defensive dividend payers can create more than their fair share of wealth over the long haul.

2. Berkshire Hathaway

  • Wealth created: $504.1 billion
  • Annualized dollar weighted return: 11.7%
  • Country: U.S.

It should come as no surprise that the greatest value investor of all time would be behind one of the best stocks of the past 30 years.

Warren Buffett took control of Berkshire Hathaway (BRK.B), a struggling textile manufacturer, in the early 1960s. It quickly became clear that U.S. textile manufacturing was in decline, and so Buffett decided to shift gears. By the late 1960s, Buffett had already diversified into banking, insurance and newspaper publishing.

He never looked back.

Berkshire is now a holding company comprising dozens of diverse businesses, selling everything from underwear (Fruit of the Loom) to insurance policies (Geico). Key acquisitions since 1990 include the aforementioned Geico, BNSF Railway, Lubrizol, Precision Castparts and General Re.

Berkshire also has been a vehicle for Buffett to invest in stocks, which he has done shrewdly and successfully. Just have a look at Apple (AAPL). Buffett’s single biggest investment, at 39% of Berkshire Hathaway’s portfolio, makes a starring appearance on our list below.

1. Johnson & Johnson

  • Wealth created: $535.3 billion
  • Annualized dollar weighted return: 13.9%
  • Country: U.S.

Johnson & Johnson (JNJ) cracks the top 10 best stocks of the past 30 years as a three-headed giant.

Alas, the corporate structure that served investors so well is coming to an end.

JNJ split off its consumer health business – the one that makes Tylenol, Listerine and Band Aid – from its pharmaceuticals and medical devices divisions. The breakup is meant to free the faster-growth, higher-margin parts of J&J from the drag of its more mature, less profitable operations.

It remains to be seen how that works out, but the old formula of being a sprawling, defensive dividend grower – this Dividend Aristocrat has lifted its payout annually for  60 years – was indisputably a successful one.

Thanks in no small part to dividends, Johnson & Johnson’s total return comes to 4,220% from 1990 to 2020, per YCharts, versus 1,950% for the S&P 500. If you were to exclude dividends from this Dow stock’s performance, JNJ would have gained just 2,020% over those same 30 years.

What do you think?

Written by Lifehack

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings