Investing in generational wealth stocks is a proven strategy for long-term financial growth. These stocks, particularly those that pay dividends, have historically outperformed other asset classes. A recent Deutsche Bank study revealed that equities have consistently outperformed gold, housing prices, treasuries, and oil over the past century.
One key finding from the study is that dividend-paying stocks tend to be the best-performing stocks. A study conducted by JPMorgan asset managers between 1972 and 2012 showed that stocks initiating and raising dividends returned an average of 9.5% annually, compared to just 1.6% for non-dividend-paying stocks.
Among the top generational wealth stocks to consider, Broadcom stands out. Known for its mobile handset computer chips, the company has successfully transitioned into producing chips for data center infrastructure. Its custom accelerators are in high demand, driven by the growth of generative artificial intelligence. Broadcom expects AI chips to account for 25% of its total sales by 2024, up from 15% in 2023. With a dividend yield of 1.2% and a track record of raising payouts for 15 consecutive years, Broadcom is a strong contender for long-term wealth accumulation.
American Tower, a specialty real estate investment trust (REIT), owns and leases cellular towers to wireless service providers and broadcast companies. It has also entered the data center market, owning 28 facilities. With over 224,000 communications sites, American Tower holds a significant market share. Despite a recent 5% decline in its stock due to concerns about a slowdown in network buildout by wireless carriers, the company is well-positioned for future growth. As a REIT, American Tower is required to pay out a significant portion of its profits as dividends. It has consistently raised its dividend by over 16% annually for the past decade, supported by a strong free cash flow growth rate.
Eli Lilly, a prominent drugmaker, has experienced substantial growth driven by the demand for its weight-loss treatments. The company’s shares have surged 59% year-to-date and have more than doubled over the past year. In addition to its weight-loss drugs, Eli Lilly has made strategic acquisitions to expand its product portfolio. For instance, its recent $3.2 billion deal to acquire Morphic Holding will provide access to an inflammatory bowel disease treatment with blockbuster potential. Eli Lilly has a strong dividend history, having paid out dividends every year since 1972. The company has raised its payout at a 10% compound annual growth rate over the past decade.