In Built to Last, authors James Collins and Jerry Porras define visionary companies as "premier institutions in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them." In other words, they are the best of the best.

The authors examined numerous companies over the years and found that many of them -- such as 3M (NYSE:MMM), Procter & Gamble (NYSE:PG), and Merck (NYSE:MRK) -- were not built by a high-profile charismatic leader. Collins and Porras ultimately conclude that "a charismatic visionary leader is absolutely not required for a visionary company, and in fact can be detrimental to a company's long-term prospects." Consider, for example, that for every Steve Jobs of Apple (NASDAQ:AAPL) fame, there's a Patrick Byrne of (NASDAQ:OSTK) shame -- someone who may have let ego get in the way of good business. Heck, even Steve Jobs has been known to let ego get in the way of good business.

The bottom line, however, is that visionary companies are never built by one man. Rather, they are premier institutions overall.

Visionary returns
We can combine those insights with the research of Jeremy Siegel, who showed that outstanding companies in mundane industries like food products and tobacco were the best performers over the past 50 years. The companies listed below were not part of a growth industry or a technological revolution, yet their returns were phenomenal.


Annual Return (1950 to 2003)



ExxonMobil (NYSE:XOM)


Coca-Cola (NYSE:KO)


From The Future of Investors by Jeremy Siegel.

These companies would qualify as "visionary" using the definition above, and each was able to deliver great returns thanks to the power of reinvesting dividends. This same principle has allowed 3M, Procter & Gamble, and Merck -- each of which has delivered healthy dividend payout ratios over their respective histories -- to rack up outstanding returns over much of the past 50 years. Indeed, of the survivors of the original S&P 500, Merck comes in at No. 7 and P&G comes in at No. 16 in terms of annual return.

Who says I'm boring?
It's clear that you don't need to own shares in a sexy company with a charismatic leader in order to outperform the market. Selecting a premier institution that pays dividends -- even if it's led by a lower-profile leader -- can also deliver outstanding returns.

This last point is one that James Early, the advisor for Motley Fool Income Investor, discussed in the February issue of his investment service. James notes that boring, overlooked stocks can often deliver great returns and that "sexy stocks don't provide sexy returns."

Foolish bottom line
When searching for visionary companies to bolster your portfolio, remember:

  1. A visionary company doesn't need flashy products or a charismatic CEO.
  2. Many visionary companies in humdrum industries deliver outstanding returns via the power of reinvested dividends.
  3. And great companies in apparently boring industries are considerably less volatile on average.

These are the types of companies James and his team look for each month. So far they've been successful; the collection of Income Investor recommendations is beating the S&P 500 by nearly 9 percentage points over a three-year period.

To see James' latest selections, plus all of the service's past picks, click here for a full-access 30-day free trial. There's nothing dull about great returns.

John Reeves does not own shares of any company mentioned. His lack of the vision thing explains why he became an editor. 3M and Coca-Cola are Inside Value recommendations. Kraft is an Income Investor pick. The Fool has a disclosure policy.