The Difference Between Building Wealth And Inventorying Wealth

Today, I saw the wire come through announcing that Campbell Soup will pay a $0.312 quarterly dividend. If someone were to buy shares of Campbell Soup today, he would get a yield of 2.75%. This is the kind of company that is useful if you want to inventory wealth and modestly improve your purchasing power over time, but it is much less useful if your goal is to build wealth. This may not be immediately obvious if you study Campbell Soup’s long-term history of delivering 10.5% dating back to 1985. It appears to be roughly equal to what you would get by investing through an S&P 500 Index Fund.

And yet, over the past fourteen years, Campbell Soup has only compounded at a rate of 6.5% per year. And it is not as if 2001 was an era of dotcom mania overvaluation for the soup giant—it was trading at 18x … Read the rest of this article!