Warren Buffett recommends most people buy an S&P 500 index fund and hold it forever. An MSCI World ETF also invests in European and Asian stocks and is therefore even more broadly based. Investors have survived every crisis with it so far and have significantly increased the purchasing power of their money in the long term. However, Warren Buffett himself relies on stocks of good companies and thus performs even better.
Last he has Activision Blizzard (WKN: A0Q4K4) shares and thus bought a quality growth stock.
Intel shares outperform the MSCI World ETF
One company that also fits Buffett’s selection criteria well is Intel (WKN: 855681). It may seem boring to some investors, but since 1982, shares have gained more than 80,127% in US dollar terms, far outperforming the MSCI World ETF (02/15/2022).
In earlier years, the chip manufacturer has grown even more strongly, but since 1996 to the present day, Intel shares have fared significantly better than the MSCI World ETF. But what distinguishes the company?
Semiconductors have become indispensable products
Intel is the world’s leading chip manufacturer. As humanity becomes more connected, semiconductors are gaining in importance. In the past they were only used in computers, tablets, laptops or smartphones, but today car manufacturers, retailers, industry and healthcare can no longer do without them. Intel also supplies cloud service providers and develops suitable software.
The portfolio includes motherboards, microprocessors and chips for pocket PCs, the Internet of Things, PCs, servers, workstations and graphics architectures. Related products include accelerators, boards, systems, connectivity products, graphics and memory products.
Stocks benefit from Intel’s market position
The good market position and product indispensability are also reflected in the finances. Between 2013 and 2021, revenue increased from $52,708 million to $79,024 million and profit from $9,620 million to $19,868 million. The profit margin has always been in the double digits, peaking at 29.2%. The same applies to the returns on equity and total capital. The equity ratio was 56.6% at the end of 2021. Shares benefit from this.
Most recently, Intel announced the takeover of the Israeli chip manufacturer Tower Semiconductor (WKN: 893169) for $5.4 billion. The group is thus becoming an important foundry service provider for factory-less chip manufacturers. Tower chips are used in automobiles, consumer electronics, industrial and medical devices. The company produces in Israel, Japan and the USA.
Intel shares are not too expensive yet
While the broad American market is already highly valued, Intel stocks are not. The group also pays a dividend on a quarterly basis. The current yield is 2.93% (02/15/2022).
The article Equities: 1 growth stock with 2.9% dividend outperforms the MSCI World ETF! first appeared on The Motley Fool Germany.
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Christof Welzel does not own any of the shares mentioned. The Motley Fool owns shares of shares of and recommends Activision Blizzard and Intel and recommends the following options: long January 2023 $57.50 call on Intel and short January 2023 $57.50 put on Intel.
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