If you invest in individual stocks, you’re probably used to seeing headlines about the top-performing stocks over shorter periods, such as for the year to date or even weekly or daily returns. There are two drawbacks to this approach. First, it’s difficult to create long-term wealth by focusing on short-term performance. In addition, even a strong-performing stock has less impact if few shareholders are around to benefit from it.
To find investments that have created the most value in dollar terms, wealth creation is a better measure. Last month, I sifted through Morningstar’s fund database to highlight the funds that created the most value based on market appreciation in dollars. This time, I conducted a similar exercise on the equity side, focusing on stocks that created the most significant gains based on the change in their market capitalization (which reflects the current stock price multiplied by total shares outstanding) over the 10 years from 2015 through 2024. To get a more complete picture of wealth creation, I added in the total value of dividends paid over the same period.
The exhibit below shows the 15 stocks that have created the most value for shareholders based on these metrics.
Top 15 Value-Creating Stocks of the Past Decade
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The stocks on my list created an estimated $20.8 trillion in shareholder wealth over the past 10 years. That’s more than 4 times my estimate of about $4.6 trillion for the top 15 funds. Owning shares in an individual stock is a lot riskier than owning a broadly diversified fund, and the odds of experiencing a loss are much higher. However, if you manage to invest in a profitable stock, the upside can be much greater.
That’s especially true given that companies with outstanding financial results and share-price performance can continue to outshine their competitors over many years. Most of the companies on my list were already mega-cap stocks 10 years ago. Tesla TSLA is one exception. The company has been around since July 2013, but it didn’t reach mega-cap status until a couple of years ago.
More broadly, all the members of the “Magnificent Seven” group of large-cap tech stocks have also generated significant shareholder wealth over the past decade. As a group, Apple AAPL, Amazon.com AMZN, Microsoft MSFT, Alphabet GOOGL, Nvidia NVDA, Meta Platforms META, and Tesla created about $16.1 trillion in shareholder value over the 10-year period, making up about three fourths of the total for the top 15.
From a sector perspective, technology-related stocks dominate the list. That shouldn’t come as a surprise, given that tech stocks have generated excess returns of more than 8 percentage points versus the broader market over the past 10 years.
Other sectors, including consumer cyclical, financial services, and healthcare, also show up in the top 15. Notably absent are old-economy sectors, such as utilities, basic materials, industrials, and real estate.
Another common thread that ties together the top 15 wealth creators: an economic moat, or sustainable competitive advantage. An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Morningstar’s equity analysts define economic profits as returns on invested capital over and above our estimate of a firm’s cost of capital, or weighted average cost of capital. Only roughly 20% of the companies we cover have a wide Morningstar Economic Moat Rating, while about 40% have a narrow moat, and the remaining 40% have no moat. However, 12 of the top 15 wealth-creating stocks have wide economic moat ratings based on our analysts’ assessments, while the remaining three have narrow moats. In other words, economic moats have been key to shareholder value creation.
Economic Moat and Growth Statistics
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Growth has also been an important trait. Growth stocks have had a significant performance advantage over the 10-year period in the study, outperforming value issues by nearly 4 percentage points per year, on average. So, it probably should come as no surprise that most of the stocks on the list are growth-oriented rather than value-oriented. As shown in the table above, the value-creation winners generated significantly better growth in revenue, operating income, and free cash flow than the market over the past 10 years.
Many of the companies on the list also sport a value-growth score, which reflects the aggregate expectations of market participants for future growth and required rates of return well above the overall market. However, a few stocks, including Berkshire Hathaway BRK.B, JPMorgan Chase JPM, and UnitedHealth Group UNH, have still generated above-average returns despite tilting more toward the value side.
Looking Ahead
Shareholders in these 15 companies have been amply rewarded over the past decade. But when it comes to equity investing, the past may or may not be prologue. What really matters for investors who are considering a new purchase is a company’s future prospects and whether the current stock price offers a margin of safety.
Morningstar Ratings and Valuations
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On that front, the wealth creators are a mixed bag. Three of the stocks on the list—Alphabet, Microsoft, and UnitedHealth—trade at large enough discounts to our analysts’ fair value estimates to garner Morningstar Ratings of 4 stars. Four of the 15 have ratings of 3 stars, indicating that they’re neither significantly undervalued nor overvalued based on our analysts’ assessments. Six others—Apple, Broadcom AVGO, Eli Lilly LLY, Mastercard MA, Tesla, and Visa V—are currently trading above our estimates of their fair value, earning them 2-star ratings. Finally, JPMorgan Chase and Walmart WMT are both trading at significant premiums to our fair value estimates. Depending on their tax circumstances and other factors, investors may want to consider selling.
The author or authors do own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
