Not Interested in Large-cap Stocks? Why You Should Be

By

Large-cap StocksIf you want to see an outstanding performance from a large-cap stock, all you have to do is pull up a long-term chart on McDonald’s Corporation (NYSE/MCD). It’s kind of odd to think that a mature business like burger flipping could be so profitable, but this company has rewarded shareholders tremendously well. This stock market performance should be studied in business schools.

For a large-cap stock and Dow Jones component, McDonald’s has appreciated steadily and with remarkable consistency since 1980. Put a ruler underneath the company’s share price and you’ll see how extraordinary its performance has been. This large-cap stock struggled in 2002/2003, but that’s about it. When the stock market collapsed in 2008 and then hit a low in March of 2009, McDonald’s basically traded flat, just below $60.00 a share. This week, it hit an all-time record high of over $101.00 per share, with a current dividend yield of 2.8%. Not bad at all if you ask me. The stock split seven times since the early 80s and is now due for another split.

A stock market performance like McDonald’s makes me think that bothering with the rest of the stock market is mostly just a waste of time. Financial markets are like a casino where the odds are stacked against you and your win is only the result of someone else’s loss.

I’ve always been a fan of investing in large-cap stocks, especially those that pay dividends. Even though I spend most of my time researching smaller companies, I’ve seen stock market portfolios with a handful of large-cap stocks create a lot of wealth for people. And the dividends compensate you for the prevailing rate of inflation and, for the most part, you sleep well at night knowing what you own. (See A Company Doesn’t Have to Be Small to Provide Big Returns.)

I don’t own shares in McDonald’s, but I wish I did. Not only is it impressive for such a large-cap stock to perform so well, but this company is renovating restaurants and expanding while other chains are struggling in this lackluster economy. The company reports its next set of financial results on January 24 and it’s a benchmark stock that I will be paying attention to.

Over the last 12 months, the stock market was flat, while McDonald’s appreciated 35% not including dividends. Over the last two years, McDonald’s appreciated 60% on the stock market and, over the last five years, the stock went up 141% not including dividends. All this proves that you can do just as well owning the right large-cap stocks as you can speculating in the latest high flyers. And you can do so with a lot less risk.

Retire on one Hot Stock

Presenting Our Top Stock Pick for 2015!

It is one of the leading companies in its industry. With quarterly revenue of $800 million and growing this company is generating over $300 million every three months in free cash flow!

"A Golden Opportunity for Stock Market Investors" is yours FREE when you opt-in to get our daily e-letter Profit Confidential. With Profit Confidential you are receiving the opinions and commentaries of seasoned financial analysts and economists. We analyze the actions of the stock market, precious metals, interest rates, real estate, and other investments so we can tell you what we believe today's financial news will mean for you tomorrow!

Combined, we have over 100 years' experience in analyzing various investment markets. Our analysts include MBAs, BAs, B.Comms, P.Engs, MAs, LLBs...and most importantly, years of experience investing and managing our own money successfully!

To opt-in to our FREE daily e-letter Profit Confidential and to get your FREE report, "A Golden Opportunity for Stock Market Investors," enter your e-mail address in the box below. You can unsubscribe at any time.

We hate spam as much as you do. Check out our Privacy Policy.

About the Author | Browse Mitchell Clark's Articles

Mitchell Clark is a senior editor at Lombardi Financial, specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, including Micro-Cap Reporter, Income for Life, Biotech Breakthrough Stock Report, and 100% Letter. Mitchell has been with Lombardi Financial for 17 years. He won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was a stockbroker for a large investment bank. In the... Read Full Bio »

Related Articles

Poll

Would you vote for Donald Trump if he was the Republican Nominee?

View Results

Loading ... Loading ...
×
From: Michael Lombardi, MBA
Subject: Golden Opportunity for Stock Market Investors

Read this message