drives investors' returns.
And therein lies the "SECRET" to how today's country-club millionaires got so rich. How they invested in a company like Tootsie Roll (of all silly things!) and sprinted past the earliest shareholders in fast-growing corporate juggernauts like IBM.
Sounds impossible, doesn't it? Well, it's a fact. And here's exactly how it works...
Investor expectations for Tootsie Roll over the last half century remained low. This kept Tootsie's stock price low. But the magic lies in the increasingly generous dividend it pays out to its investors over this time.
Each time a dividend was paid, it allowed investors to buy a larger number of cheaply priced shares. Over time, this translated to Tootsie Roll investors accumulating many more shares than what they started out with.
How many more? If you'd purchased 100 shares of Tootsie in 1950, and reinvested your dividends, you'd have 24,305 Tootsie shares today.
That's 243 times more than what you started out with!
And amazingly, that's assuming the share price doesn't move one penny higher the entire time you own the stock -- in fact, the stock can fall steadily and you still make out!
IBM, on the other hand, was exorbitantly priced and only paid out a small dividend to its investors. Over this time, IBM shareholders only accumulated 3 times more shares than what they started out with.
Tortoise "Boring" Tootsie Roll gives investors 243 times their original number of shares! | Hare "Thrilling" IBM gives investors just 3 times their original number of shares! |
And that's how a sleepy old confectioner with just one real product crushes the world's fastest-growing technology company -- a company that delivered a torrent of innovation that touched and transformed each and every one of our lives.
It's how the tortoise beats the hare almost every time. It's how high-dividend paying stocks outperformed every other investment class since the first stock traded...
End of Part 3 Check out Part 4 for final closings