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The Top Stocks of the Next 50 Years

John Reeves (TMFBane)
January 26, 2007

Is it possible to determine the top-performing stocks of the next half-century? Before looking into the future, we need to consider the past. So let's start at the very beginning (as Julie Andrews might say).

Fishing in a well-stocked pond
Those familiar with the work of Wharton professor Jeremy Siegel will know that dividend-paying stocks like Altria and Coca-Cola were the best performers since the beginning of the S&P 500 back in 1957.

The key to the amazing returns of these stocks was reinvested dividends. This is a theme we've covered in numerous articles here at the Fool, but that insight is worth emphasizing. If we are searching for top stocks for a time frame of 50 years, we need to look at dividend-paying stocks.

One place to begin our search might be the Mergent Dividend Achievers Select Index, whose constituents are U.S.-based companies that have all increased their annual dividend payments for 10 or more consecutive years. Since 1996, the index has returned 11.81% per year on average, which compares very favorably with the S&P 500's 8.43% over that time.

The magnificent seven
The index contains 212 dividend-paying companies. I've put together a sample of seven of them below:


Dividend Yield

Procter & Gamble (NYSE: PG  )


Johnson & Johnson (NYSE: JNJ  )


ExxonMobil (NYSE: XOM  )


General Electric (NYSE: GE  )


Wal-Mart (NYSE: WMT  )


Harley-Davidson (NYSE: HOG  )


Legg Mason (