There is one particular business that Jeremy Siegel highlighted in “Stocks for the Long Run” that grew earnings and dividends at a slower rate than its most notorious 20th century tech peer, but nevertheless managed to turn a $10,000 investment into $1.2 million fortune over the course of fifty-three years. The basis for the long-time outperformance is that a high dividend yield, coupled with the growth in the absolute amount of dividend payments over time, at a favorable valuation, is such a potent combination force that it can even excel in comparison to businesses that grow at a high clip but are valued accordingly.
I recently engaged in a conversation with a long-term reader (hat tip to you, Michael) who was unsure about the future of the PC and tablet market as he contemplated an investment in Intel. He has been regularly following the latest news items in the chip industry, trying to determine whether or not Intel is the right fit for a long-term investment.
Look—long-term investing does not have to be that difficult. When I look for a long-term investment, I want to find a company with such blindingly obvious long-term economics that it does not require much skill, time, effort, critical thinking, etc. to figure out whether or not the company will be pumping out profits for shareholders twenty years from now.
Originally posted 2013-07-19 05:02:52.