Not sure which S&P 500 stocks are the best to buy for the next 10 years? There's no question where the top place to put your money this past decade was.
Fifteen S&P 500 stocks — including Apple, Microsoft and Alphabet — are the top wealth creators in the past 10 years, says a new analysis from Morningstar. They generated nearly $16 billion in total wealth in that time.
That's a whopping amount of wealth in just a small group of stocks. It outstrips by four times the amount of wealth made by mutual fund investors in the past 10 years, Morningstar says.
"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," Morningstar said. "However, if you manage to invest in a profitable stock, the upside can be much greater."
The Best In The S&P 500
This list itself may not be surprising. Many of the stocks are also in the Magnificent Seven. But what's surprising is how Morningstar says most of these 15 have "wide moats" to protect them from future competitive threats.
"Thirteen of the top wealth-creating 15 stocks have a wide economic moat, a structural competitive advantage allowing a firm to sustain excess profits over time," Morningstar said. "Only 15% of all companies under Morningstar's coverage have a wide Morningstar Economic Moat Rating."
Measuring The Wealth Creators
To find out which S&P 500 stocks added the most value, Morningstar examined those with the largest rise in their market capitalization over the 10-year period from 2014 to 2023. Morningstar also added the value of dividends paid and share repurchases over the same period.
The Magnificent Seven are huge winners. They all have "generated significant shareholder wealth over the past decade," Morningstar said. As a group, Apple, Amazon.com, Microsoft, Alphabet, Nvidia, Meta Platforms and Tesla created about $12 trillion in shareholder value over the 10-year period. That makes up about 75% of the total for the top 15, Morningstar says.
Not a single stock from utilities, basic materials, industrials or real estate made the list.
What's Next?
On the bright side, the wealth-creator stocks are tough to compete with. That bodes well for their future profit.
Of these 15 stocks, 13 have wide economic moats. Only two, Tesla and UnitedHealth, have narrow moats. Most of the stocks are growth stocks.
But Morningstar is careful to note that "the past may or may not be prologue." Not one of the wealth creators are trading at low enough valuations to win the 4- or 5-star Morningstar ratings. And five S&P 500 stocks — including Broadcom, Eli Lilly, JPMorgan Chase, Meta and Home Depot — are trading above Morningstar's fair value estimates.
"Depending on their tax circumstances and other factors, investors may want to consider selling," said Morningstar.
Top Wealth Creators
In the past decade (sorted by value created)
| Company | Symbol | Moat | Morningstar Rating |
|---|---|---|---|
| Apple | Wide | 3 | |
| Microsoft | Wide | 3 | |
| Alphabet | Wide | 3 | |
| Amazon.com | Wide | 3 | |
| Nvidia | Wide | 3 | |
| Meta Platforms | Wide | 2 | |
| Tesla | Narrow | 3 | |
| Broadcom | Wide | 2 | |
| Berkshire Hathaway | Wide | 3 | |
| Eli Lilly | Wide | 2 | |
| JPMorgan Chase | Wide | 2 | |
| Visa | Wide | 3 | |
| UnitedHealth Group | Narrow | 3 | |
| Mastercard | Wide | 3 |
