Most stocks lose money – that’s an unfortunate truth. But the few winners can make up for the many losers: since 1925, seventeen stocks have made cumulative returns of more than five million percent. The top one alone would have turned a single dollar into $2.6 million by today. So I’ve run through the list of companies that formed the elite group and summarized what you can learn from their success.

Which stocks trumped the rest?

Renowned academic Hendrik Bessembinder looked at data from a near-complete record of US stocks traded since 1925. After crunching the numbers, he uncovered the companies that delivered the highest compounded returns – including reinvested dividends – over nearly a century.

The top spot went to Altria (formerly Philip Morris), with a mind-blowing 265,528,900% return. Yup, $1 invested back in 1925 would have turned into $2.6 million by the end of 2023 – not too shabby for a company selling tobacco, a product that's been under fire for decades.

Coming in second and third are Vulcan Materials, the biggest producer of raw construction materials in the US, and Kansas City Southern, a railroad now part of Canadian Pacific. If you’d invested a dollar in those two in 1925, you’d be sitting on $393,492 and $361,757 now, respectively. Some of the other names on the list might sound more familiar: Coca-Cola, Pepsi, Boeing, Universal, Hershey, Johnson & Johnson, and IBM all brought in returns of more than five million percent. You can find the full lineup below.

What does the data mean for you?

1: You don’t need sky-high annual returns to make a fortune

This bit might surprise you. When you break down the results of the stocks that generated the most wealth, their annual performances aren’t exactly worth writing home about. Take Altria, the number-one performer: it averaged 16% a year. That’s solid, sure, but not jaw-dropping – especially when some stocks can increase by thousands of percent in a single year. The lesson is clear: to turn one dollar into hundreds of thousands, you don’t need explosive short-term returns. What you do need, however, is a company that can consistently deliver steady returns – 10% to 15% is enough – over the long haul.

2: Longevity beats flashiness

Plenty of stocks have beaten Altria’s 16%-a-year return. Issue is, they didn’t stick around for long enough to make a lasting impact. Case in point: the average company was in the database for less than seven years – after that, they were delisted for performance reasons, merged, or acquired. In contrast, the top performers compounded their returns over an average of 92 years. Out of nearly 30,000 stocks, only a handful were able to keep delivering over decades. So remember, a flash of excellence has historically been trumped by stocks with a much longer run of reliable, resilient performance.

3: The winning industries might not be the buzziest ones

The industries that stood the test of time weren’t exactly the most glamorous or well-loved sectors: it was cigarettes, gravel, oil, guns, junk food, and pharma that turned out solid returns for nearly a century. Of course, that is – to some extent – a sign of the times. But you can reduce the impact of legacy and longevity by looking at the stocks with the highest annualized returns over at least 20 years, rather than just cumulative returns. And even then, it’s not the Big Tech fest you might expect. Sure, Nvidia dominates the list, and Netflix and Amazon also made the cut. But you might not have expected them to be sitting among the likes of scientific publisher Plenum Publishing, media conglomerate Time Warner, beverage company Keurig Green Mountain, and swimming pool distributor Pool Corp.

4: Small differences add up big time

Altria and Vulcan Materials both spanned the entire 98-year dataset, and their annualized returns are within touching distance of each other –16.3% for Altria and 14.05% for Vulcan. But get this: over nearly a century, that small gap resulted in Altria’s total return being 6.75 times greater. That’s a perfect illustration of how small differences compound, leading to massive wealth differences over the long term. Even a tiny edge – say a slight improvement in performance, or a touch of savvy cost-cutting – could influence the level of luxury that your retirement fund can afford.

So what can you change about your approach?

I’ve taken three practical lessons from the study.

First, don’t get dazzled by the glitter. It’s only natural to be intrigued by stocks that could triple your money in a year – but even if you strike gold once, those returns are rarely repeatable. (After all, you won’t find any GameStop-style stocks on Bessimbeder’s list.) Instead, you’re more likely to lose a chunk of that money over time. And remember Buffett’s number-one rule: never lose money. (Rule number two? That’s to not forget the first one)

Instead, focus on identifying quality stocks that can compound returns. (We’ve written about how to do that here). Just think: of the many traders who have seen flashes of success, it’s Warren Buffett who’s become the richest investor. He credits his success with finding exceptional businesses with strong “moats” – essentially, a competitive advantage – that can generate solid returns over decades. The patience is worth it: more than 95% of Buffett’s wealth was accumulated after he turned 65.

Third, keep your costs low. As we’ve seen, even a small difference in annual returns can lead to huge gains over the long term. That means shaving off just 1% in fees by switching to a cheaper broker or investment vehicle could have the same impact as finding a short-term winner. Those cost savings compound over time, adding significant value to your portfolio.