Are you hoping to become a self-made millionaire? It's certainly possible even if you're not a professional artist or athlete. The key for most ordinary people is just investing what you can when you can, picking the right stocks, and then leaving them alone long enough to let them do the heavy lifting.
Here's a rundown of three magnificent stocks that have not only helped bunches of investors become millionaires, but will likely continue doing the same into the distant future.
1. Coca-Cola
There's nothing particularly exciting about The Coca-Cola Company (KO 0.33%). Sure, it's the name behind the world's most popular soft drink. It also owns several other familiar brands, like Gold Peak tea, Minute Maid juices, Powerade sports drinks, and Dasani water, just to name a few. But the drinks industry is crowded, competitive, and limited in terms of growth potential.
But this market saturation doesn't really matter when you've perfected the art -- and science -- of convincing people to purchase your product over and over again, which is precisely what this company has done. From a brilliant combination of steady lifestyle branding efforts (most Gen-Xers and older folks still remember the "I'd like to teach the world to sing" jingle from 50 years ago!) to leveraging its sheer size when negotiating pricing, production, and product placement with its retail and bottling partners, Coca-Cola has become parent to several of the world's most recognized beverage brand names.
Investors have come along for the ride, too. A $10,000 investment in Coke stock 50 years ago would be worth roughly half a million bucks today. And that's just the stock's price appreciation. By reinvesting any dividends paid in the meantime into more shares of Coca-Cola, your initial investment would be worth over $2 million now. Slow-and-steady clearly wins the race.
The toughest part of owning a stake in this slow-moving dividend payer is, of course, remaining patient enough to let your reinvested dividends create enough of a cash-driving critical mass to matter. Not everybody is willing or able to simply wait and watch, trusting that big returns are in the cards.
This might help: The Coca-Cola Company has raised its dividend every year for the past 62 years. The split-adjusted quarterly dividend of $0.195 it was dishing out in 1994 has grown to $0.485 per share now. It's also worth remembering that there's never going to be a time when people don't get thirsty.
2. Alphabet
Alphabet (GOOG -0.11%) (GOOGL -0.08%) doesn't pay a meaningful dividend. Its current yield stands at just under 0.5%. Rather, Google's parent has taken a more direct approach to turning its investors into millionaires. Since the company's initial public offering in 2004, shares have gained an incredible 7,000%.
Granted, the company's very best days are probably in the past. Search engines aren't exactly a high-growth business anymore, now that much of the developed world is already regularly online. It's also a crowded market, with alternative search engines like Microsoft's Bing getting traction.
That line of thinking looks past a couple of important realities regarding Alphabet, however.
One of these realities is the fact that while the search engine market is no longer a huge growth driver, that business isn't the only meaningful one Alphabet is in. YouTube now accounts for roughly one-tenth of the company's top line, and a little more than one-tenth of the company's total revenue comes from its still-young cloud computing arm. Alphabet's cloud arm only recently swung to an operating profit, and its bottom line continues to grow at a much faster clip than any of its other businesses. The market may be underestimating the near-term profit growth that's in the cards here.
The other detail worth drawing out is that while Alphabet's breadwinning Google already controls a commanding 90% of the world's search engine market -- according to numbers from GlobalStats -- there's actually still ample opportunity for above-average growth on this front. Market researcher Mordor Intelligence believes the so-called next-generation search engine market (improved by the addition of artificial intelligence, for instance) is set to grow at an annualized pace of nearly 15% through 2029. Alphabet's first-quarter search advertising revenue was also up 14.3% year over year.
Connect the dots. Every time it seems like the company's out of opportunities, it finds a new lever or two to pull.
3. Amazon
Last but not least, add Amazon (AMZN 3.90%) to your list of magnificent stocks that have already minted lots of millionaires, but could continue making more.
The company doesn't need much of an introduction. It arguably launched the entire e-commerce industry once internet access became common in the late 1990s and early 2000s. Market research company eMarketer reckons Amazon controls on the order of a commanding 40% of the United States' e-commerce market. But, despite Amazon's dominance of North America's online-shopping landscape, eMarketer believes Amazon's share of this market is going to continue growing at least through 2025 rather than stagnating, or even shrinking.
That dominance is only part of the bullish argument for owning Amazon stock, however. Amazon is also the world's single-biggest cloud computing service provider, and this business is a beast. It accounts for more than 60% of the company's operating income,lifted again by its first-quarter revenue growth of 17%. Although it's well-developed already, Mordor Intelligence says the global cloud computing services market is on pace to grow at an average annual pace of more than 16% at least through 2029.
Amazon is finally firing on all cylinders on another front as well. That's international e-commerce. While this arm's regularly operated in the red (with the exception of the height of the coronavirus pandemic), it's been cutting its international business' operating costs and growing sales for a couple of years. Last quarter's international operating income of $903 million is the most profitable this unit's been since its record-breaking profit of $1.25 billion in Q1 2021. Only this time, there's room and reason for the trajectory to continue carrying both its sales and income upward.
Data source: Amazon Inc. Chart by author. All figures are in millions of dollars.
In the meantime, Amazon remains North America's online shopping powerhouse.
It's unlikely Amazon stock will be able to repeat the 244,000% gain logged since its 1997 IPO over the course of the next 27 years. That certainly doesn't mean it can't continue outperforming the overall market, though.
