Over the long run, the stock market is the greatest wealth creator on the planet. Since 1980, the benchmark S&P 500 has delivered an average annual total return (i.e., including dividends) of more than 10%. Put another way, the most widely followed index is doubling every seven years over the past four decades.
But stocks don't typically go up in a straight line. Down years happen, and it's a normal part of the investing experience. Apple, the largest publicly traded company, finished lower in 2015 and 2018, while highflier Amazon finished in the red in 2011 and 2014.
However, some well-known companies didn't get that memo. Over the past 12 years (2009-2020), five brand-name stocks have delivered positive total returns every single year, without fail. All of these companies are looking for lucky No. 13 in 2021.
Forgive the apropos cliché, but payment facilitator Visa (V 2.08%) has done nothing but charge ahead since the Great Recession. Not only has Visa delivered a positive total return in each of the past 12 years, but it's outperformed the S&P 500 by at least 12% in seven of the last 10 years.
What makes Visa such an impressive company is its ties to U.S. and global growth. As U.S. and global gross domestic product expand and consumers/businesses spend more, Visa should see a steady uptick processing fees. Since recessions often last for mere months, whereas periods of economic expansion are measured in years, Visa's operating model is almost guaranteed to be successful over the long run. And it certainly doesn't hurt that Visa controls over 50% of U.S. credit card network purchase volume.
Also helping Visa is its avoidance of lending. Though the fees and interest income that accompanies lending could be quite lucrative during periods of economic expansion, rising credit and loan delinquencies must be dealt with during periods of contraction or recession. Since Visa isn't a lender, it doesn't have to set capital aside for delinquencies and credit losses. That's why it's so quick to rebound from stock market crashes and recessions.
Semiconductor solutions provider Broadcom (AVGO 5.92%) has also been an unstoppable force since the Great Recession. With the exception of 2011 and 2018, Broadcom hasn't had a total return of less than 12% over the past decade.
Broadcom will be leaning heavily on smartphone demand in its quest for a 13th consecutive green year. It's been a decade since wireless download speeds were upgraded, which means the 5G rollout is going to be a big-time boom for the company. Broadcom manufactures wireless chips and other infrastructure solutions found in smartphones. With 5G infrastructure upgrades expected to take a while, the technology upgrade cycle could last for many years to come.
Broadcom is also looking to take advantage of the cloud-computing revolution. Long before the pandemic hit, we were seeing businesses move their data into the cloud. However, the shuttering of offices worldwide due to the pandemic accelerated that move. With so much enterprise data now in the cloud, data center storage demand is expected to grow immensely. As a provider of connectivity and access chips for data centers, Broadcom should be a clear beneficiary.
If you thought Broadcom's eight years of double-digit total returns over the past decade were impressive, wait till you get a closer look at healthcare stock UnitedHealth Group (UNH 0.97%). Its worst-performing year over the past decade was a 9% total return in 2012.
UnitedHealth has two core operating segments, each of which brings something important to the table. First up are its health insurance operations. This is a relatively slower-growth segment, but it provides the steadiest and most-predictable cash flow. More importantly, with President Joe Biden looking to rebuild the Affordable Care Act, it should lead to stronger premium pricing power for UnitedHealth over time.
Secondly, UnitedHealth generates the bulk of its growth from Optum, which aims to streamline healthcare systems by providing health management services, care delivery, and financial services. Last year, in spite of the worst recession in decades, Optum's sales jumped by 21%. Also of note, Optum's operating margins are usually a couple of percentage points higher than its health insurance segment. That makes Optum UnitedHealth's key to future growth.
Warehouse club Costco Wholesale (COST 1.24%) hasn't let its shareholders down since 2008. Like UnitedHealth, it's only had one year with a single-digit total return over the past decade. But it's also had six years since 2011 where it's delivered at least a 20% total return.
One of the many reasons Costco is so successful is its size. This is a company that almost exclusively buys in bulk. By purchasing large quantities of goods, Costco is able to drive down its costs and pass along lower prices to its members. Buying in bulk also allows the company to be flexible with the goods that it buys, leading to some unique discounts on discretionary items within its stores.
Beyond just throwing its weight around, Costco benefits from the membership model. The fees the company collects from its annual memberships help to buoy margins. By keeping its grocery margins razor-thin, Costco is dangling an insatiable lure to bring in new members. When these folks buy discretionary items, Costco reaps the rewards.
Fifth and finally, the House of Mouse, Walt Disney (DIS 3.51%), has been unstoppable for more than a decade. Although Disney has had four years over the last decade where its total return was only marginally positive (1% to 5%), it's also had five years where its total return was 25% or higher.
Disney's success essentially boils down to two factors: engagement and innovation. When it comes to engagement, few companies have the ability to connect with people across generations like Disney. From its multiple theme parks to its decades of iconic movies, the Disney brand is synonymous with family and fun. When a brand becomes that entrenched in American culture, it's often a good bet to succeed.
Secondly, Disney has remained innovative. In particular, the company's launch of its streaming Disney+ service has surpassed even the loftiest expectations. Once expected to bring in up 60 million to 90 million subscribers by 2024, Disney now expects its streaming service to have as many as 260 million subscribers by late 2024 (i.e., five years after launch). Disney's ability to keep engaging people beyond theme parks and movie theaters is its ticket to a potential 13th straight year of gains.