16 Painfully Boring Companies With Extraordinary Long-Term Returns

The single-best stock to own over the last half-century had nothing to do with technology, innovation, or breakthroughs. It was cigarette giant Altria Group, which has returned an average of 20.5% a year since the 1960s. Take tobacco, stuff it into a paper tube, repeat. That has turned $1,000 into $3.7 million in fewer than 50 years.

In a world where whispers of the next big thing command most of the attention, the painfully boring Altria -- which today makes a product nearly identical to what it made a century ago -- has been one of the greatest success stories of all time.

I think that's amazing.

And that story isn't rare. There are dozens of put-you-to-sleep companies that have achieved incredible returns over the last 30, 40, even 50 years.

Keep in mind: Past performance doesn't indicate future returns. This isn't a buy list, but rather a demonstration of how companies that make ordinary products can generate extraordinary returns.

All of these charts are in log scale to more accurately show change:

16 Painfully Boring Companies with Extraordinary Long-Term Returns from The Motley Fool.


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  • Report this Comment On November 27, 2012, at 4:57 PM, Darwood11 wrote:

    Nice article.

    Boring? Yes, tortoises are boring, Everyone apparently loves the wild hares running around in circles. Ditto for the gerbils in cages. Check the headlines and the companies I am referring to will be readily apparent.

    I guess that long term investing and planning is a disregarded art for most investors, who want to strike it rich in a week, or if they can wait that long, in a month.

    Hey, the Powerball jackpot is worth $500 million. Of course, the odds are about 175 million to 1. But as they say, somebody has to win, and of course, someone will be struck by lightening today!

    I'm happy to report that I own several companies on this stodgy, boring list. But not Altria. I can't profit that way.

    Anyway, good article Morgan.

  • Report this Comment On November 27, 2012, at 7:01 PM, Mathman6577 wrote:

    The company I work for, UTC (NYSE:UTX) has returned 10% a year for the last 30 years (just off the list here). I've had it in my 401k since 1983. I'll take its boredom anytime :)

  • Report this Comment On November 28, 2012, at 1:06 PM, knatetheblade wrote:

    Morgan,

    You're profile shows you're long Berkshire Hathaway, but it's not included on your list.

    According to http://allfinancialmatters.com/2008/04/02/a-look-at-berkshir... the price of BRK.A on Dec 31, 1967 was $20.50

    Based on that a $1,000 investment would now be worth $6,439,219.51, for an annualized return of 21.55%

    It should should actually be the #1 stock on your list, but gets no love, what gives?

    Nate

  • Report this Comment On November 28, 2012, at 1:13 PM, TMFMorgan wrote:

    ^ It's not a very boring company.

  • Report this Comment On November 28, 2012, at 1:26 PM, astuber9 wrote:

    ^ Insurance is not boring?

  • Report this Comment On November 28, 2012, at 1:29 PM, TMFMorgan wrote:

    Insurance is boring. Buying the world's best insurers when no one else wants to touch them (same for stocks) isn't.

  • Report this Comment On November 28, 2012, at 1:39 PM, knatetheblade wrote:

    Doesn't Buffet invest the float from his insurance businesses in boring stocks?

    I always thought of Berkshire stock as a mutual fund of boring stocks, and isn't that the point of this article?

  • Report this Comment On November 28, 2012, at 1:49 PM, TMFMorgan wrote:

    Yes, you could say he invests in boring stuff. But Buffett's investing prowess itself -- the key factor in acquiring those boring companies -- is much more complicated. That's why he's worth $50 billion and most people aren't.

  • Report this Comment On November 28, 2012, at 3:21 PM, knatetheblade wrote:

    ^ touche. Great read, also enjoyed 50 Unfortunate Truths About Investing

  • Report this Comment On November 28, 2012, at 6:11 PM, MAACPRIME wrote:

    You're the man, Morgan.

  • Report this Comment On November 29, 2012, at 5:04 PM, XMFAimeeD wrote:

    I knew MKC would be in there, such a great company. Thanks for the stats!

  • Report this Comment On November 30, 2012, at 12:11 PM, fool3090 wrote:

    Boring is indeed good. Why then do I find myself investing in small chunks of Hidden Gems recommends such as Zipcar (car sharing), Solazyme (bio chem) and Dynamic Materials (explosive welding) when I should be adding to positions in Compass Minerals (salt), Darling Int'l (fat rendering) and Brooksfield Infrastructure Partners (timber, ports, toll roads, pipelines)?

    We can't deny that for many of us, investing also has an entertainment side to it along with amassing returns. It's hard to filter this out when Dynamic Materials doubled for me, as did Brooksfield. Explosive welding is cool. Toll roads and ports are boring. But they netted the same but at vastly different risk profiles. (Note to self: be more boring.)

  • Report this Comment On November 30, 2012, at 1:39 PM, parrotwallace wrote:

    Read The Millionaire Next Door, almost all of those people have boring businesses - like mine - and they just plug along under everyone's noses.

    I own a boring business, and I like investing in them.

  • Report this Comment On December 02, 2012, at 8:18 AM, Tuxster12345 wrote:

    Great long-term returns are one thing. But, what about the volatility to get those nice long-term returns?

    For example, if a company has had a long-term compounded annual return of 22.5%, but with a geometric standard deviation of those returns of 49.2 percentage points, then that's a lot of volatility. The long-term geometric standard deviation for the S&P 500 index is less than 20 percentage points.

    Here, I'm using volatility as a proxy for risk.

    If one's risk tolerance is high, then none of this should matter. But on the other hand, if one of worried about risk, one should keep it in mind, and not just concentrate on return.

    I understand that stock returns are not 100% normally distributed, because there tends to be more outliers, than otherwise.

    So, my point is for people to keep in mind.

  • Report this Comment On December 04, 2012, at 1:19 PM, hbofbyu wrote:

    "Boring" is a subjective term. Nucor has not been a boring company. We revolutionized the industry.

    Ken Iverson put in place a bonus structure with no limits - this included everyone involved in production. Yields doubled and the doubled again. The (no union) production workers with high school educations were making double and triple the money that management was. We partnered with a German company on the motors and roller syncronization) and a Japanese company (Yamato) for advances in continuous casting and further increased the yields further by integrating their technology. My eyes were opened years before I had heard Munger's quote about management always underestimating the power of incentives.

    I have since worked for 3 different high-tech companies. High-tech generally is boring by comparison.

  • Report this Comment On December 04, 2012, at 5:50 PM, earlygirlretiree wrote:

    I just can't see investing in companies that pay less than 3.5% dividend yields. The only one on this list that meets that criteria is Nucor. There are other dividend aristocrats that yield better. I don't have a problem with holding Altria; it's dividend pays more than 5%, as does AT&T. I'm 60 years old, I can't wait for growth, I need the yield now for income. I do own other companies that do not meet that yield, but any new money has to go to more yield. That is a simplification of course, dividend yield is only one part of looking for value. That being said, "Show me the money!"

  • Report this Comment On December 05, 2012, at 7:23 PM, wingcruiser wrote:

    It is interesting to note that the returns for each of these companies were more or less stagnant through the 1970s and their rapid growth started right at the beginning of the 1980s. Hmm, what happened around 1980 to 1983? That's a lesson that could be relearned today if anyone was paying attention.

  • Report this Comment On December 08, 2012, at 11:09 PM, Stuief wrote:

    "Addiction is continuing an activety despite the fact that it harms you." Anon

    "Launder" the profits from a highly addictive substance into legitimate investments. Increase the addictiveness of the substance. Create a convenient delivery system. Contradict, deny, ignore and lobby against the scientific facts as they emerge. Defend its use as "freedom of choice".

    Nothing boring about it, especially to the customers fighting for their lives.

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