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.
In a slightly different form, that business still prospers to this day. It is one of my personal favorite businesses, serving as one of the rare businesses that has unquestionable strength, an unflappable dividend track record, and a present valuation range that suggests the shares trade at a moderate discount.
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Originally posted 2018-11-04 20:21:13.