Investing isn't easy. Even Warren Buffett counsels 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 individual stocks have performed against the broad S&P 500.
Step on up, South Jersey Industries
South Jersey Industries shares have crushed the S&P 500 over the past quarter-century, and did it with less volatility:
Source: S&P Capital IQ.
Since 1987, shares have returned an average of 12.6% a year, compared with 9.7% a year for the S&P (both include dividends). That difference adds up fast. One thousand dollars invested in the S&P in 1987 would be worth $19,200 today. In South Jersey Industries, it'd be worth $45,110.
Dividends accounted for a lot of those gains. Compounded since 1987, dividends have made up about three-quarters of South Jersey Industries' total returns. For the S&P, dividends account for 39% of total returns.
Now have a look at how South Jersey Industries earnings compare with S&P 500 earnings:
Source: S&P Capital IQ.
Decent outperformance. Since 1995, South Jersey Industries earnings per share have increased by 7.9% per year, compared with 6% a year for the broader index.
What's that meant for valuations? South Jersey Industries has traded for an average of 16 times earnings since 1987 -- below the 24 times earnings of the broader S&P 500.
Through it all, shares have been strong performers over the past quarter-century.
Of course, the important question is whether that will continue. That's where you come in. Our CAPS community currently ranks South Jersey Industries with a five-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add South Jersey Industries to My Watchlist.
Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter, @TMFHousel. Motley Fool newsletter services have recommended buying shares of South Jersey Industries. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.