Year 2051

Thirty years is a long time. Thirty years ago, Operation Desert Storm liberated Kuwait, the New York Giants won Super Bowl XXV, and Dances with Wolves won the Academy Award for best picture.

Today, The 30-Year US Treasury yields 2.05%. It’s hard to imagine investing in a bond that matures in 2051, but some individuals will buy it for safety due to the recent stock market volatility. Safety is a relative term, of course. Bonds are safer than stocks in the short term, but it’s hard to beat a basket of great companies over time. 

According to YCharts, 1,660 companies yield more than 2.05%, including 138 that raised their dividend by 10% or more during the past year.    

I plucked five companies from this list, including Broadcom, Amgen, Texas Instruments, Best Buy, and T.Rowe Price.  If you invested $10,000 in each stock ten years ago, they would be worth $329,320 today – a gain of 558%! If you purchased a bond instead, your total return would have been about 20%.

If you invested $50,000 in these stocks today, your annual income would be $1,325, or $300 more than the 30-Year US Treasury. In addition, your potential gain from these stocks is substantially more than a bond.

I will always take my chances with a basket of great companies with a history of rising dividends. Companies with solid balance sheets and dependable cash flows are tough to defeat.

Do you know the only thing that gives me pleasure? It’s to see my dividends coming in. ~ John D. Rockefeller

October 18, 2021

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.