An additional study demonstrates that proponents of buy-and-hold index investing have new evidence supporting the soundness of their methods.
While most equities underperform compared to almost any other risk-free asset, just a very small number of stocks are responsible for much of the equity market’s long-term value creation.
55.2 percent of U.S. stocks and 57.4 percent of non-U.S. stocks underperformed basically risk-free one-month U.S. Treasury notes in a survey of more than 64,000 worldwide equities from January 2002 to December 2022. Furthermore, the top 2.4% of stocks have produced all of the $75.7 trillion in net global stock market value created in the last two decades.
From January 2002 to December 2022, these stocks in the article generated the most value for investors. Just a brief reminder on how to build wealth: If you’re looking for a list of the best-performing stocks, this isn’t it. When it comes to creating shareholder wealth, which is the rise in market value adjusted for cash movements in and out of a company, such as dividends and share repurchases, they were the most successful.
Consider it like this: For the fortunate few who had the good fortune to gamble on a microcap penny company that delivered a 10,000 percent price gain, the prize is substantial – but it has little impact on the total wealth of equities investors.
These top stocks, which include well-known international companies, long-term dividend growth stocks, and a few recognized Dow stocks, have earned enormous wealth for a large number of investors over the years.
Walt Disney
As one of the finest stocks of the last two decades, Walt Disney (DIS) is also one of the best stocks of all time. Disney’s ability to adapt to a rapidly shifting media world has paid off handsomely for shareholders. Disney, which had the biggest share price gain during the past 20 years, has acquired Pixar Animation Studios, Marvel Entertainment, Lucasfilm (of Star Wars renown), and a significant portion of 21st Century Fox in the last two decades alone. It has a slew of cable networks, with Disney Channel and ESPN among the most well-known. As soon as Disney+ launched, it was a huge success. For the record, Disney theme parks are still a worldwide draw.
There have been many ups and downs lately, but you can’t argue with the stock’s previous record as a component of the Dow Jones Industrial Average. Shares of the multi-billion dollar entertainment business have provided exceptional gains over a long period of time.
Coca-Cola
Although IT stocks have ruled the roost for the last two decades, this does not imply that traditional consumer brands have become obsolete.
Witness Coca-Cola (KO), one of Warren Buffett’s all-time favorite companies, is a constituent of the Dow Jones Industrial Average.
For decades, KO has maintained its competitive advantage by expanding its product line to include teas, coffee and sports and energy drinks, bottled water, juices, and dairy and plant-based beverage options. Even as the popularity of carbonated drinks has waned, the company’s ever-expanding product portfolio has kept it relevant as one of the world’s most famous brands.
KO’s wealth-creation record is bolstered by the company’s large and expanding dividend payments. Since 1920, Coca-Cola has paid a quarterly dividend, which has risen yearly for the last 59 years.
Intel
Although Intel (INTC) has been one of the top stocks of the previous 20 years, the semiconductor company is unlikely to prolong that record for another 20 years.
INTC, which was founded in 1968, is one of the oldest technological businesses, and its durability has paid off handsomely for stockholders. Because of its early beginnings, the business was able to dominate the market for computer chips. At one time, Intel held a near-total market dominance in personal computer CPUs (central processing units) and It still accounts for roughly 80% of all cases nowadays. Back-end server CPUs, which are in high demand due to the fast migration to cloud computing, are likewise a stronghold for Intel.
Intel squandered potential in mobile and a slew of other areas, which is concerning. As a consequence, the Dow has been a long-term market laggard and has never regained its 2000 tech-bubble heights.
UnitedHealth Group
UnitedHealth Group (UNH) has become the world’s most valuable and profitable health insurance corporation thanks to a series of acquisitions. The price-weighted Dow Jones Industrial Average also ranks it as the most influential stock.
In 1977, UnitedHealthcare was founded, and the firm went public in 1984. It hasn’t looked back since. Through acquisitions and mergers, it has grown its company by acquiring or combining with several other companies such as MetraHealth, HealthWise of America, and AmeriChoice.
Optum, a division of UNH, is one of the country’s leading pharmaceutical benefit managers and has been a major factor in the stock’s recent rise. In fact, over the last five, ten, and fifteen years, UNH stock has outperformed the wider market by large percentages.
Furthermore, Wall Street believes that the good times will continue. Analysts often recommend UnitedHealth Group as one of the best blue-chip companies to purchase.