Please ensure Javascript is enabled for purposes of website accessibility

Stocks for the Long Run: Eaton Vance vs. the S&P 500

By Motley Fool Staff – Nov 23, 2012 at 11:18AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A long history of returns.

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, Eaton Vance (EV).

Eaton Vance shares have just crushed the S&P 500 over the last quarter-century:

Source: S&P Capital IQ.

Since 1987, shares have returned an average of 18.1% 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 Eaton Vance, it'd be worth $203,200.

Dividends accounted for a lot of those gains. Compounded since 1987, dividends have made up 46% of Eaton Vance's returns. For the S&P, dividends account for 39% of total returns.

Now have a look at how Eaton Vance earnings compare with S&P 500 earnings:

Source: S&P Capital IQ.

Big outperformance here, too. Since 1995, Eaton Vance's earnings per share have increased by an average of 15.3% per year, compared with 6% a year for the broader index.

What's that meant for valuations? Eaton Vance has traded for an average of 23 times earnings since 1987 -- just below the 24 times earnings for the broader S&P 500.

Through it all, shares have been outstanding performers over the last quarter-century.

Of course, the important question is whether that will continue. That's where you come in. Our CAPS community currently ranks Eaton Vance with a four-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add Eaton Vance to My Watchlist

Motley Fool Staff has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. We Fools may not 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eaton Vance Stock Quote
Eaton Vance
EV

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.