The Dividend Mailbox® How Compounding Can Turn Underperfomers Into Big Winners
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Feb 24, 2024 Explore the power of compounding through the insights of economist Jeremy Siegel. Discover how underperforming sectors can yield surprising returns over time. Learn about the contrasting performances of iconic companies like Standard Oil and IBM and how consistency beats flashiness. Gain strategic tips on managing your portfolio for maximum dividend growth and long-term success. Find out why slow and steady might just win the race in investing!
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Standard Oil vs. IBM
- In Jeremy Siegel's book, he compares investing $10,000 in 1950 in either Standard Oil or IBM.
- Standard Oil returned over double IBM's return by 2010, despite IBM's seemingly stronger growth metrics.
Power of Compounding
- Compounding returns from cash flow, especially when stocks are undervalued, is key to long-term growth.
- Standard Oil's success stemmed from reinvesting higher cash flow into cheaper shares.
Tried and True Investments
- Invest in consistently growing companies, even if they're not in high-growth sectors.
- Undervalued stocks that remain stagnant for years can yield high returns when they eventually appreciate.
