You can prize many different things in a stock. Bottom-line performance is one, and Tim Hanson detailed the past decade's top performers in this article, leading off with drink purveyor Hansen Natural (Nasdaq: HANS ) , up more than 24,000% in 10 years. (Yes, 24,000% -- enough to turn $5,000 into more than a million dollars!)
Another desirable trait is consistency. It may even be more desirable than absolute returns, since many companies' returns can fluctuate considerably. Coca-Cola's (NYSE: KO ) stock, for example, is below where it was nine years ago. (Take it from me, a shareholder.)
If you're wondering which stocks have the most consistent records, Jon Markman of MSN Money has the answer. He found that among the vast universe of thousands of stocks, only 17 had increased in value every year over the decade from 1996 through 2005. They were (including their average annual gain over the period):
-
Chico
's FAS (NYSE: CHS ) , 90%
-
SCP Pool (Nasdaq: POOL ) , 57%
-
Expeditors International of
Washington (Nasdaq: EXPD ) , 46%
-
Center Financial (Nasdaq: CLFC ) , 43%
-
Brown & Brown, 40%
-
Florida
Rock Industries, 35%
-
Genlyte
Group (Nasdaq: GLYT ) , 35%
-
Cathay
General Bancorp, 33%
-
Gracom, 33%
-
Southwest Water, 28%
-
Simpson Manufacturing, 28%
-
Harbor
Florida
Bancshares, 27%
-
Frank
lin Electric, 22%
-
Australia
and
New Zealand
Banking, 21%
-
Home Properties, 18%
-
National Australia Bank, 16%
-
New Jersey
Resources, 13%
The first thing that struck me about this list is the relatively high returns that each company delivered. You might think that some firms made the list by averaging an annual return of 2%, or 5%, or something. But no. Consistency appears to be tied to strong performance.
What should we, as investors, do with this list? Well, we might consider any of these firms for our own portfolio. They're not guaranteed to do well in the future (some may be out of business in 10 years, for all we know), but they sure have promising track records, which is more than many firms can boast.
We might also begin looking for consistency in other stocks we consider for our portfolios. A firm needn't have risen in every year of the past decade, but if it has a respectable string of solid gains in revenues, earnings, stock price, etc., that's a big plus.
Another way to get a degree of consistency is to invest in companies that pay significant dividends. As long as the firm remains healthy -- even if its stock stalls for several years -- you'll be receiving a dividend, which can make a big difference. (Again, take it from me, a Coca-Cola shareholder.)
To get recommendations of many promising dividend-payers, I invite you to test-drive our Motley Fool Income Investor newsletter. Here's what lead analyst Mathew Emmert recently said about his collection of recommendations: "This month, even our lower-dividend security boasts a yield 50% higher than the S&P 500, while the higher-yield pick yields more than 3.6 times the market. With the average current yield of our holdings standing at 4.7% -- again, nearly three times the S&P's yield -- we're very well positioned for whatever challenges the market throws our way." About 16 of the newsletter's picks have yields above 6%; check it out for free and you'll be able to access all past issues and read about every recommendation in depth.
Longtime Fool contributor
Selena Maranjian
owns shares of Coca-Cola, a Motley Fool Inside Value recommendation. The Motley Fool has a truly consistentdisclosure policy.
RSS Headlines
Fool UK