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.

Fishing in a well-stocked pond
Those familiar with the work of Wharton professor Jeremy Siegel will know that dividend-paying stocks such as 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. We've covered this theme in numerous articles here at the Fool, but that insight is worth emphasizing. If we're searching for top stocks over the next half-century, we need to look at dividend-paying stocks.

We might begin that search with the Dividend Achievers Select Index from Indxis, which tracks U.S.-based companies that have all increased their annual dividend payments for 10 or more consecutive years. Since its inception in 2001, the index has beaten the S&P 500 by more than three percentage points per year.

The magnificent seven
The index contains 209 dividend-paying companies. We've put together a sample of seven of them below:


Dividend Yield

Wal-Mart (NYSE:WMT)


Johnson & Johnson (NYSE:JNJ)


McDonald's (NYSE:MCD)




Fortune Brands (NYSE:FO)


Chevron (NYSE:CVX)


Vulcan Materials (NYSE:VMC)


Data from Yahoo! Finance as of Feb. 10, 2009.

Most of these companies need no introduction. Odds are that you visit at least one of these stores or use one of their products nearly every day. Wal-Mart and McDonald's were the only two Dow components to gain ground in a lousy 2008. Perhaps the most obscure of the group, Vulcan Materials, is a building-materials supplier that could benefit substantially from increased infrastructure spending.

Will any of these be among the top stocks of the next 50 years? It's tough to say for sure, though we do believe one or two will make the list.

Looking ahead
If history is any indication, the top stocks of the next 50 years will have stable, growing dividends; reasonable valuations (part of the reason for Altria's outperformance, Siegel says, is that the constant threat of litigation meant it was always undervalued); and good managers.

Even if you find one of these stocks, you'll only benefit from its potential gains if you hold for the long term and let the power of reinvested dividends work in your favor.

James Early, advisor of our Motley Fool Income Investor newsletter service, scours the markets for the best performers of the next 10, 20, and yes, 50 years. Income Investor recommendations boast an average dividend yield greater than 5%. Collectively, those picks are beating the market at large by five percentage points. You can see all of his picks and research for free with a no-obligation 30-day trial.

Further Foolishness that really pays off:

Fool contributor Dan Caplinger updated this article, originally written by John Reeves and published Jan. 26, 2007. Dan doesn't own shares of any of the companies mentioned. Johnson & Johnson is a Motley Fool Income Investor selection. Wal-Mart and Vulcan Materials are Motley Fool Inside Value recommendations. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.