Investing isn't easy. Even Warren Buffett councils 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 members of the S&P 500 have performed compared with the index itself.
Step on up, Boeing
Boeing shares have slightly outperformed the S&P 500 over the past three decades:
Source: S&P Capital IQ.
Since 1980, Boeing shares returned an average of 11.6% a year, compared with 11.1% a year for the S&P (both include dividends). Even that small difference adds up. One thousand dollars invested in the S&P in 1980 would be worth $29,400 today. In Boeing, it'd be worth $33,200.
Dividends accounted for a lot of those gains. Compounded since 1980, dividends have made up 54% of Boeing's total returns. For the S&P, dividends account for 41.5% of total returns.
And now have a look at how Boeing's earnings compare with S&P 500 earnings:
Source: S&P Capital IQ.
Fairly significant outperformance. Since 1995, Boeing's earnings per share have grown by an average of 8.1% a year, compared with 6% a year for the broader index. That's testament to global growth, its economies of scale, and operating in an industry with a virtual duopoly.
That earnings-growth dynamic has led to above-average valuations. Boeing has traded for an average of 28.3 times earnings since 1980, compared with 21.3 times for the S&P.
The company has been, clearly, an above-average performer historically.
The question is whether that can continue. That's where you come in. Our CAPS community currently ranks Boeing with a four-star rating (out of five). Do you disagree? Leave your thoughts in the comment section below, or add Boeing to My Watchlist.
