Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Investing isn't easy. Even Warren Buffett counsels that most investors should invest in a low-cost index, like the S&P 500. That way, "you'll be buying into a wonderful industry, which in effect is all of American industry," he says.
But there are, of course, companies whose long-term fortunes differ substantially from the index. In this series, we look at how individual stocks have performed against the broad S&P 500.
Step on up, MGE Energy (Nasdaq: MGEE ) .
MGE Energy shares have outperformed the S&P 500 over the last quarter-century, and with less volatility:
Since 1987, shares have returned an average of 10.3% a year, compared with 9.7% a year for the S&P (both include dividends). One thousand dollars invested in the S&P in 1987 would be worth $19,200 today. In MGE Energy, it'd be worth $22,900.
Dividends accounted for a lot of those gains. Compounded since 1987, dividends have made up about 80% of MGE Energy's total returns. For the S&P, dividends account for 39% of total returns.
Now have a look at how MGE Energy earnings compare with S&P 500 earnings:
Some underperformance here, but that's expected from a utility. Since 1995, MGE Energy's earnings per share have increased by an average of 3.8% a year, compared with 6% a year for the broader index.
What's that meant for valuations? MGE Energy has traded for an average of 16 times earnings since 1987 -- below the 24 times earnings for the broader S&P 500.
Through it all, shares have been strong performers over the last quarter-century.
Of course, the important question is whether that will continue. That's where you come in. Our CAPS community currently ranks MGE Energy with a five-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add MGE Energy to My Watchlist.