Best Blue Chip: Altria Strikes Gold

In the spirit of the Winter Olympics, which start today in Torino, Italy, The Motley Fool is pitting companies against one another. The writers will outline why their company is the best, and our very own panel of judges will decide the winner after a period of deliberation. Today the first gold medal is awarded for the Best Blue Chip. Stay tuned for more!

Olympic dreams are big, and so are the five candidates for the Best Blue Chip medal that took to the fiscal slaloms this week.

All five seem worthy. ExxonMobil (NYSE: XOM  ) is coming off the biggest profits in corporate history. General Electric (NYSE: GE  ) is a respected conglomerate with a CEO who's putting his money where his mouth is by buying shares for himself. Coca-Cola (NYSE: KO  ) owns the most recognized brand in the world. Johnson & Johnson (NYSE: JNJ  ) has more than 200 distinct products and has hiked its dividend for 40 straight years. Lastly, there's Altria (NYSE: MO  ) , the tobacco giant with the fattest yield of the lot.

When each stock took to flexing its muscles before our judges, four of the five received a smattering of applause. Then it was Altria's turn to show its stuff, and the "Boo" birds came out in droves.

"Tobacco kills," said one detractor.

"Lawsuits forever," said another.

It didn't look good for the Marlboro Man. Even the lofty 4.5% dividend wasn't enough hush money to silence the critics. The judges seemed ready to narrow their search to the four remaining big and beautiful equities when something amazing -- perhaps controversially so -- happened. Jeremy Siegel, author of the investing classic Stocks for the Long Run, visited the judges last night.

It seemed innocent enough at first. The legendary scholar was presenting a bullish case for stocks as the asset class of choice. Then he began to rebuff a published argument that, if the original S&P 500 components had been purchased when the index was formulated in 1957, the returns would have been less than stellar.

Siegel, armed with an army of data-hungry students, decided to track the results for himself. After tracking the 125 stocks that continue to trade on their own, and tacking on the 92 that merged with other entities, the 11 that were reissued from privatization, and 111 separate spinoffs, Siegel found that the portfolio of surviving S&P 500 stocks from 1957 would have actually trounced the market.

What was the best-performing stock in that time? Altria. Yes, the company formerly known as Philip Morris has delivered an annualized return of 19.75% since 1957. That's nearly twice the 10.85% that the S&P has averaged over the same duration. Performance proved to be the ultimate argument-settler. The judges turned their backs on the crowd favorites and handed Altria the gold. It had smoked the competition.

The fix was in. Let the conspiracy theories start.

"Tobacco still kills," said one detractor at the medal ceremony.

"Lawsuits last forever," said another.

"So does gold," Altria shouted back from the highest of podiums.

Seeking more stocks with solid-gold dividends?Motley Fool Income Investorcan help you find world-class stocks that pay you to invest. Sign up today for a free 30-day trial subscription.

Longtime Fool contributor Rick Munarriz really did join his fellow Foolish judges to hear the amazing Jeremy Siegel speak. Jeremy also noted that Philip Morris happens to be the only stock owned by new Fed chairman Ben Bernanke. Rick does not own shares in any of the companies in this story. Coca-Cola is aMotley Fool Inside Valuepick. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 511424, ~/Articles/ArticleHandler.aspx, 7/29/2014 10:06:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement