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These 3 Stocks are Decade Long Outperformers

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Investors are always looking to beat the market, searching for stocks that deliver consistent long-term gains. And perhaps to the surprise of some, many non-tech stocks have delivered outsized gains over the last decade.

Several factors contribute to long-term outperformance, including consistent sales growth, margin expansion, efficient capital deployment, and innovation.

Three stocks – Caterpillar (CAT - Free Report) , Domino’s Pizza (DPZ - Free Report) , and Cintas (CTAS - Free Report) – have all outperformed the S&P 500 over the last decade, all posting at least a 15% annualized return.

Below is a chart illustrating the performance of all three over the last ten years, with the S&P 500 blended in as a benchmark.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s take a closer look at each.

 

Caterpillar Keeps Raising Quarterly Dividend

Caterpillar, known for its iconic yellow machines, is the largest global construction and mining equipment manufacturer. The earnings estimate revisions trend has been notably bullish for its current fiscal year, up 17% over the last year to $21.73 per share.

Positive revisions hit the tape following its latest set of quarterly results, with the company’s next release expected in just a few weeks on August 6th.

Zacks Investment Research
Image Source: Zacks Investment Research

The stock has long been a favorite among income-focused investors, currently holding the ranks of a Dividend Aristocrat thanks to 25+ years of increased payouts. The company currently sports a 6% five-year annualized dividend growth rate paired with a sustainable payout ratio sitting at 24% of its earnings.

Below is a chart illustrating the company’s dividend payouts on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

It’s worth noting that Caterpillar recently announced an 8% hike to its quarterly payout on June 12th, bringing the quarterly total to $1.41 per share. Margin expansion has also aided the strong share performance over the last decade, as we can see below.

Please note that the chart below is on a trailing twelve-month basis.

Zacks Investment Research
Image Source: Zacks Investment Research

 

Domino’s Pizza Delivers Robust Quarterly Results

Domino’s is a top player in the Quick-Service Restaurant Pizza category. The company is actually on the reporting docket for this week, with its results expected to come on July 18 before the market’s open.

Recent quarterly results have been positive, with the company exceeding the Zacks Consensus EPS estimate by an average of nearly 10% across its last four releases.

Analysts have been positive on the upcoming release, with the $3.68 Zacks Consensus EPS estimate up 2% over the previous several months and suggesting Y/Y growth of 20%. Revenue expectations have moved similarly, with DPZ expected to see 8% sales growth.

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Image Source: Zacks Investment Research

Consistent sales growth has aided the strong share performance, with the company’s 17.6% five-year annualized dividend growth rate also keeping shareholders happy over the years. Growth is expected to continue in a big way, with consensus expectations for its current fiscal year suggesting 10% earnings growth on 8% higher sales.

Peeking ahead to FY25, consensus expectations suggest an additional 14% of EPS growth paired with a 7% sales climb. The stock sports a Style Score of ‘A’ for Growth.

Zacks Investment Research
Image Source: Zacks Investment Research

 

Cintas Enjoys Profitability Boost

Cintas’ products and services include uniforms, floor care, restroom supplies, first aid, and safety products, taking care of any business needs. The stock currently sports a favorable Zacks Rank #2 (Buy), also expected to deliver quarterly results this week on July 18 before the market opens.

Shares popped post-earnings following its latest set of quarterly results, now trading at all-time highs. Stocks making new highs tend to make even higher highs, particularly when positive earnings estimate revisions are present.

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Image Source: Zacks Investment Research

Like CAT, margin expansion has helped aid share performance nicely over the last decade, as we can see illustrated below. A shareholder-friendly nature has also kept investors happy, with Cintas sporting a sizable 22% five-year annualized dividend growth rate.

Zacks Investment Research
Image Source: Zacks Investment Research

 

Bottom Line

All investors look to reap outsized gains, precisely what all three stocks above – Caterpillar (CAT - Free Report) , Domino’s Pizza (DPZ - Free Report) , and Cintas (CTAS - Free Report) – have done over the last decade, providing annualized returns in excess of 15%.

Several factors have contributed to their long-term outperformance, including consistent sales growth, meaningful margin expansion, efficient capital deployment, and innovation.


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