10 Best Stocks for long-term (20 Years) investing

1. The 10 Best Stocks You Might Actually Buy [Fool.com: Commentary] May 11, 2006 Page 1 of 4
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By Seth Jayson (TMF Bent)
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May 11, 2006
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I'm easily obsessed by what I read. Too
Income Investor
much Tom Wolfe and my sentences are
Inside Value
paragraph-length head trips. If my bedtime
Int'l Report New!
stories come from Stephen King, it'll be a
Rule Breakers
week of sewer-dwelling monster-clowns and
Rule Your Retirement
Stock Advisor the quot;coppery taste of blood and fearquot; on the
TMF Money Advisor back of my tongue.
More...
Investing This month, I'm obsessed with something a
Bonds bit less frightening. In fact, it's downright
Broker Comparison uplifting. I'm talking about the numbers in
ETFs Jeremy Siegel's book, The Future for
Index Funds
Investors. In it, the man who's credited with
Mutual Funds
quot;calling the topquot; of the Internet bubble --
Stock Ideas
the timing of which he maintains was luck --
More...
demolishes many of the investing tropes
Personal Finance that cost us all time and money.
401(k)
Calculators
One of the myths he puts to rest is that
Credit Reports
obscure and unheard-of stocks are
Financial Advisors
necessary if you hope to trounce the wider
Home Buying/Rates
Insurance market. This is simply not true. And that's
IRAs especially good news, I think, because I
Savings/CDs
have grave doubts about whether any of us
Taxes
can actually find the next big thing. Don't
Travel Center
get me wrong -- I want to find it, but I'm a
More...
realist, and I think my odds of catching that
train are low.
RSS Headlines
SiteMap/More Topics
Email Subscriptions Siegel's wide-ranging analysis only
Fool Radio
reinforces that suspicion, scuttling the idea
Work at The Fool
that blindly chasing growth -- in hopes that
one or two big winners can make up for a
pile of big risks -- will make you wealthy.
http://www.fool.com/news/commentary/2006/commentary06051114.htm?source=ihghlpba... 5/11/2006

2. The 10 Best Stocks You Might Actually Buy [Fool.com: Commentary] May 11, 2006 Page 2 of 4
(Turns out, when you toss a pile of
spaghetti against the wall to see what
sticks, most of it really does land on the
floor. The one or two noodles that remain
will not provide a meal.)
No sleuths needed
Here's the most simple and powerful
takeaway from Siegel's work: You don't
have to look under rocks to find stocks that
deliver solid returns.
It's possible to generate market-beating
gains with reliable, well-known companies,
the kind of stocks you might actually buy,
companies that won't give you an ulcer.
Let's go to Siegel's numbers. These are the
top 10 quot;survivorquot; stocks of the original S&P
Latest Fool.com Headlines
500, from inception until post-2000, as
ranked by their average annual returns.
Do Drink the Water [Thu 4:16 p.m.]
The World's Best Broker [Thu 4:13 p.m
Annual Average
Company Smith & Nephew Gets a Leg Up [Thu 4
Return P/E
Universal Display Is Outrageous [Thu
19.8% 13.1
Altria
Repsol Requires Repair [Thu 3:58 p.m
16.5% 21.4
Abbott Laboratories
Will Cash Flow Set Liberty Global Free?
16.4% 23.5
Bristol-Meyers Squibb p.m.]
Urban Outfitters' Tough Fit [Thu 3:51
Tootsie Roll Industries
16.1% 16.8
(NYSE: TR)
CryptoLogic Not Quite a Winner [Thu 3
Pfizer (NYSE: PFE) 16.0% 26.2 Is Sara Lee Beginning to Turn Around?
p.m.]
16.0% 27.4
Coca-Cola
Encysive Evasive About Thelin [Thu 3:
15.9% 25.3
Merck
Steris Stained [Thu 3:28 p.m.]
PepsiCo (NYSE: PEP) 15.5% 20.4
The Next Great Mutual Fund [Thu 3:10
15.2% 21.6
Colgate-Palmolive
Static for Deutsche Telekom [Thu 3:06
The 10 Best Stocks You Might Actually
15.1% 13.4
Crane
3:02 p.m.]
Source: Jeremy Siegel, The Future for Investors.
Universal Display Lights the Way: Fool
[Thu 3:01 p.m.]
I find this list incredible, because it shows
the power of investing in well-known More Headlines »
companies. Not one of these firms was a
newcomer back in the 1950s. In fact, many
of them were already decades old and
famous worldwide when the index was
created. Yet they all provided market-whomping returns. How is that possible?
Dividends, please
Here's the secret: Those returns are calculated with dividends reinvested. In fact, as Sie
explains, a healthy dividend, regularly redeployed, is the key to compounding average r
long-term, market-beating gains.
This makes perfect sense. When strong companies suffer a down market, those dividend
more shares. When the markets readjust, you reap the rewards of those additional shar
http://www.fool.com/news/commentary/2006/commentary06051114.htm?source=ihghlpba... 5/11/2006

3. The 10 Best Stocks You Might Actually Buy [Fool.com: Commentary] May 11, 2006 Page 3 of 4
The longer I invest, the more I find myself adding these kinds of companies to my portfo
being a value type, I try to buy them when they're cheapest, but I'm not afraid to pay u
As the third column in the above table shows, premium companies always demand a bit
price in the market. For what it's worth, these days I'm keeping my eyes open to add m
companies that I consider consumer brand powerhouses of the future -- though I'm stre
definition a bit. On my quot;hmmmquot; list are: everywhere eateries such YUM! Brands (NYSE
owns KFC, Taco Bell, Pizza Hut, and others; usual durable goods suspects such as Proct
(NYSE: PG); companies I already own, such as UST (NYSE: UST); and some up-and-com
staples such as Sadia -- that I like to think of as the Kraft Foods (NYSE: KFT) overseas
The Foolish bottom line
The lesson looks clear enough to me. Boring, already-well-known dividend-payers can p
returns for decades. You don't have to give up your search for the next big thing, but bu
keeping) a strong portfolio foundation with stocks like these is the smartest way to play
Their track record for performance makes them perfect for your tax-free retirement acco
my colleague Robert Brokamp has discussed in his Motley Fool Rule Your Retirement ser
stable of dividend-payers means income without stock sales. (Let's face it, the best way
house is not to burn the furniture.)
If you'd like to learn more about how dividend-payers like these can help you retire in st
guest pass to Rule Your Retirement is free. There's even a featured interview with Jerem
where you can learn more about the Wizard of Wharton's research.
This article was originally published March 10, 2006. It has been updated.
Seth Jayson likes to see that cash. At the time of publication, he had shares of UST but
any other company mentioned here. View his stock holdings and Fool profile here. Coke,
Colgate-Palmolive are Motley Fool Inside Value recommendations. Merck and Kraft are I
Investor picks. Fool rules are here.
Recent Articles by Seth Jayson
05/11/2006 - The 10 Best Stocks You Might Actually Buy
05/11/2006 - Hansen Overheated
05/11/2006 - Hansen's Monstrous Q1: Fool by Numbers
05/11/2006 - Arden's Boring Consistency: Fool by Numbers
05/09/2006 - Dell Is Dead to Me
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4. The 10 Best Stocks You Might Actually Buy [Fool.com: Commentary] May 11, 2006 Page 4 of 4
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