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, Alliant Energy (NYSE:LNT).
Alliant Energy shares have slightly underperformed the S&P 500 over the past quarter-century:
Since 1987, shares have returned an average of 8.6% a year, compared with 9.7% a year for the S&P (both include dividends). One thousand dollars invested in the S&P in 1987 would be worth $19,200 today. In Alliant Energy, it'd be worth $13,900
Dividends accounted for a lot of those gains. Compounded since 1987, dividends have made up 87% of Alliant Energy's returns. For the S&P, dividends account for 39% of total returns.
Now have a look at how Alliant Energy earnings compare with S&P 500 earnings:
Some underperformance here, too. Since 1995, Alliant Energy's earnings per share have declined slightly, compared with 6% a year growth for the broader index.
What's that meant for valuations? Alliant Energy has traded for an average of 16 times earnings since 1987 -- below the 24 times earnings for the broader S&P 500.
Through it all, shares have been disappointments 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 Alliant Energy with a three-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add Alliant Energy to My Watchlist.
Fool contributor Morgan Housel and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
No Holiday Reprieve for 2 of the Biggest Retail Train Wrecks
Most department store chains have posted surprisingly strong results for the 2017 holiday season. However, these perennial laggards couldn't capitalize on the uptick in consumer spending.
3 Stocks That Could Put Amazon's Returns to Shame
These three tickers could be better bets than Amazon for new investors right now.
Will This iPhone Supplier’s Terrific Run Continue in 2018?
Lumentum's growing momentum in 3D sensing could help it overcome the weakness in the telecom segment.