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Welcome to Episode #456 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, Tracey wanted to re-visit some of the stories she has covered over the last decade about the successful mom and pop investors who grew their stock portfolios from nothing to over a million dollars.
Every few years, it seems like one of these stories comes out. They are almost always about an older man or woman who has quietly amassed a huge stock portfolio when they had no professional experience in the financial markets.
What lessons can we take from how they did it?
These Successful Investors Have One Trait in Common
Who can forget Ronald Read, the Vermont janitor who died in 2014 with an $8 million stock portfolio? He started investing after World War II and was self-taught. He read the Wall Street Journal at the local library.
When he died, at age 92, he owned shares in 95 companies. Most were big cap blue chip companies. His top 10 stocks included Wells Fargo, Proctor & Gamble, JM Smucker, Johnson & Johnson, and Raytheon.
Anne Scheiber’s story was similar. She started with $5,000 in 1944 and invested in blue chip companies, like pharmaceutical giant Schering-Plough, for 51 years. When she died in New York City at the age of 102, her portfolio was worth $22 million.
Anne Scheiber is considered by some to be one of the greatest non-professional investors of all time.
Grace Groner was a secretary at Abbott Laboratories, in the Chicago suburbs, for 40 years. In 1935, she bought 3 shares of her employer’s stock for $180. She held it for 75 years and reinvested the dividends. When she died in 2010 at age 100, it was worth $7.2 million.
What was the common trait of all three of these investors?
They invested for decades. They died in their 90s or 100s and owned stocks for more than 50 years. They rarely sold. They reinvested the dividends.
They used the power of compounding to grow their portfolios to new heights.
Wells Fargo is one of the largest banks in the United States. In 2013, it was Ronald Read’s largest stock holding in his $8 million portfolio, worth about $510,000. This was despite the big bank sell-off during the 2008-2009 financial crisis.
Shares of Wells Fargo are up 67.6% over the last 5 years, which is trailing the S&P 500 at 75.8%. But Wells Fargo is back to paying a dividend again. It’s now yielding an attractive 2.5%.
Wells Fargo is a value stock. It trades with a price-to-book (P/B) ratio of 1.5. Bank analysts say to buy a bank when the P/B is at 1.0 and sell at 2.0. At 1.5, Wells Fargo is still cheap.
Should long-term investors consider a big bank like Wells Fargo & Co. for their portfolio?
Abbott Laboratories is a medical technology company. It has been in business for 138 years. Grace Groner worked as a secretary at Abbott for 40 years.
Abbott Labs started paying dividends in 1924. Grace Groner bought shares in 1935. She reinvested the dividends. Abbott Labs has raised its dividend for 54 consecutive years. That’s impressive. The dividend currently yields 2.6%.
Shares of Abbott have struggled in the last 5 years, falling 17.7%. It has an attractive price-to-earnings (P/E) ratio of 17.5.
Should a medical technology company like Abbott be on your long-term investing short list?
Abbott Labs spun off AbbVie on Jan 1, 2013. It’s a global pharmaceutical company. Many long-term investors, like Grace Groner, often hold onto shares of spin-off companies. She died before the AbbVie spin-off, however.
Shares of AbbVie have outperformed in the last 5 years, gaining 136.5% compared to the S&P 500, which went up 75.8%. Anne Scheiber and Ronald Read both owned large pharmaceutical stocks in their portfolios.
Like Abbott, it is also shareholder friendly. It currently pays a dividend, yielding 2.7%.
Earnings are expected to rise 40.5% in 2026. AbbVie is attractively priced with a forward P/E of 18.5.
Are the pharmaceutical companies like AbbVie a good foundation for a long-term portfolio?
What Else Should You Know About Creating a Million-Dollar Portfolio?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of ABBV in the Zacks Value Investor portfolio and in her own personal portfolio.]
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How to Create a Million-Dollar Stock Portfolio
Key Takeaways
Welcome to Episode #456 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, Tracey wanted to re-visit some of the stories she has covered over the last decade about the successful mom and pop investors who grew their stock portfolios from nothing to over a million dollars.
Every few years, it seems like one of these stories comes out. They are almost always about an older man or woman who has quietly amassed a huge stock portfolio when they had no professional experience in the financial markets.
What lessons can we take from how they did it?
These Successful Investors Have One Trait in Common
Who can forget Ronald Read, the Vermont janitor who died in 2014 with an $8 million stock portfolio? He started investing after World War II and was self-taught. He read the Wall Street Journal at the local library.
When he died, at age 92, he owned shares in 95 companies. Most were big cap blue chip companies. His top 10 stocks included Wells Fargo, Proctor & Gamble, JM Smucker, Johnson & Johnson, and Raytheon.
Anne Scheiber’s story was similar. She started with $5,000 in 1944 and invested in blue chip companies, like pharmaceutical giant Schering-Plough, for 51 years. When she died in New York City at the age of 102, her portfolio was worth $22 million.
Anne Scheiber is considered by some to be one of the greatest non-professional investors of all time.
Grace Groner was a secretary at Abbott Laboratories, in the Chicago suburbs, for 40 years. In 1935, she bought 3 shares of her employer’s stock for $180. She held it for 75 years and reinvested the dividends. When she died in 2010 at age 100, it was worth $7.2 million.
What was the common trait of all three of these investors?
They invested for decades. They died in their 90s or 100s and owned stocks for more than 50 years. They rarely sold. They reinvested the dividends.
They used the power of compounding to grow their portfolios to new heights.
3 Stocks These Long-Term Investors Bought
1. Wells Fargo & Co. (WFC - Free Report)
Wells Fargo is one of the largest banks in the United States. In 2013, it was Ronald Read’s largest stock holding in his $8 million portfolio, worth about $510,000. This was despite the big bank sell-off during the 2008-2009 financial crisis.
Shares of Wells Fargo are up 67.6% over the last 5 years, which is trailing the S&P 500 at 75.8%. But Wells Fargo is back to paying a dividend again. It’s now yielding an attractive 2.5%.
Wells Fargo is a value stock. It trades with a price-to-book (P/B) ratio of 1.5. Bank analysts say to buy a bank when the P/B is at 1.0 and sell at 2.0. At 1.5, Wells Fargo is still cheap.
Should long-term investors consider a big bank like Wells Fargo & Co. for their portfolio?
2. Abbott Laboratories (ABT - Free Report)
Abbott Laboratories is a medical technology company. It has been in business for 138 years. Grace Groner worked as a secretary at Abbott for 40 years.
Abbott Labs started paying dividends in 1924. Grace Groner bought shares in 1935. She reinvested the dividends. Abbott Labs has raised its dividend for 54 consecutive years. That’s impressive. The dividend currently yields 2.6%.
Shares of Abbott have struggled in the last 5 years, falling 17.7%. It has an attractive price-to-earnings (P/E) ratio of 17.5.
Should a medical technology company like Abbott be on your long-term investing short list?
3. AbbVie Inc. (ABBV - Free Report)
Abbott Labs spun off AbbVie on Jan 1, 2013. It’s a global pharmaceutical company. Many long-term investors, like Grace Groner, often hold onto shares of spin-off companies. She died before the AbbVie spin-off, however.
Shares of AbbVie have outperformed in the last 5 years, gaining 136.5% compared to the S&P 500, which went up 75.8%. Anne Scheiber and Ronald Read both owned large pharmaceutical stocks in their portfolios.
Like Abbott, it is also shareholder friendly. It currently pays a dividend, yielding 2.7%.
Earnings are expected to rise 40.5% in 2026. AbbVie is attractively priced with a forward P/E of 18.5.
Are the pharmaceutical companies like AbbVie a good foundation for a long-term portfolio?
What Else Should You Know About Creating a Million-Dollar Portfolio?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of ABBV in the Zacks Value Investor portfolio and in her own personal portfolio.]