The Aristocrats - An Example of Smart Investing

Video Transcript 

My name's Robert Bonavito, New Jersey forensic account. This video is a part of a series of videos where I discuss forensic accounting topics for educational purposes only. If this was a litigated matter, I would take a different approach, have different conclusions based on different facts and circumstances.

My name's Robert A. Bonavito, New Jersey forensic accountant. Today's topic is going to be the aristocrats. And hopefully you've heard that term before because I'm gonna be a little bit concerned if you haven't. But the aristocrats is a very unique list of stocks listed on the New York Stock Exchange that have dividends that have for 25 consecutive years. And, you know, when you look at a investment, what's the important thing? The important thing is what are you getting, what is the cash flow? And that's usually a divined. That's what you usually get from a stock. So when I tell you that the aristocrats...and you can, you know, put this...go online and do this and you'll get a list of the aristocrats, it's companies that are really solid because they've issued dividends for 25 consecutive years, and they've increased 'em every single year. Companies like AT&T, New Core, there's a whole list of 'em. But my forensic accounting, we come...we actually come across this quite often. And in fact, like, a couple months ago, I had a client, you know, a perspective client call me and they said that they gt a call from a stock broker who said that they had a sum of money that was deposited in their name in a brokerage account 30 years ago. And it was deposited by their father. And I think it was originally $1,800.

So it was, you know, 30 years ago. So it was $1,800 30 years ago. And what his father did was he invested in these what I call aristocrats or what everybody calls aristocrats, these companies that have dividends that increase every year. And over that...we had to go in and look at these stocks just to make sure that everything was accounted for. Because when he bought these stocks 30 years ago, they split off, they acquire companies, they [inaudible 00:02:25], you know, two for one splits, three for one, all kinds of crazy stuff. But his father was a pretty smart man because this account sat in the brokerage account for 30 years, no one ever touched it, okay? And finally they located the son and they said, "You had in the bank," he had $4,252,000. Five, five. Okay. So in 30 years, this is 30 years, right, the account went from $1,800 to over $4 million, okay? And this is just by... We did a analysis of the whole account. I'm telling you, we have this happen a least once every two years, someone comes to be me with some kinda case involving stocks that have gone up for some reason or someone did something wrong. But in this case, it was just lost for 30 years. And what that...what does that equate to? A 20% annual return, 20% annual return. And he did nothing.

So the purpose of this video is just to let you know that, you know, there are investments out there. And sometimes by just making an investment and let it seat there, it will grow, the dividends will compound, the company will acquire other companies. Some of the companies went outta business in this portfolio, but a lot of 'em split, and bought, and, you know, I think there's like six original or seven original companies, and here there was like 15, so it split off many other companies.

So, you know, the purpose is for you to understand that, one, that the...sometimes if you have good companies, you can just put it in there and just let it ride, and the magic of compounding will work wonders. So maybe you have a account somewhere that somebody left with $1,800 and now its worth over $4 million. Hopefully you do. My name's Robert Bonavito. If you have any questions or you'd like to email me on this, feel free to.