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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, GATX (NYSE: GMT ) .
GATX shares have outperformed the S&P 500 over the past quarter-century:
Since 1987, shares have returned an average of 9.9% 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 GATX, it'd be worth $20,500.
Dividends accounted for a lot of those gains. Compounded since 1987, dividends have made up 64% all of GATX's returns. For the S&P, dividends account for 39% of total returns.
Now have a look at how GATX earnings compare with S&P 500 earnings:
Underperformance here. Since 1995, GATX's earnings per share have declined, compared with 6% a year growth for the broader index.
What's that meant for valuations? GATX has traded for an average of 17 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 past quarter-century.
Of course, the important question is whether that will continue. That's where you come in. Our CAPS community currently ranks GATX with a one-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add GATX to My Watchlist.