Sentimental Stockholdings
As stock pickers, professionals and amateurs alike are terrible. Seriously, terrible. Like so many wise people before me, I would want you all to know that nobody knows anything about what’s going to happen. And it’s completely possible that a major player in the S&P 500 will be disrupted (think GE, now reinvented and back in the index) or a minor player on the NASDAQ (think any number of de-listed tech or bio companies) will cease to exist. There are no guarantees.
But there are a few opportunities that feel like a sure bet—the “tried and true” like the slightly dull Berkshire Hathaway and Microsoft–that aren’t as sexy as some. If you were lucky enough to purchase either of these in the 1980s and hold them, you are a wealthy person today. And it makes me smile when a client tells me her parents purchased a few shares for them when they were children. Of course, had her parents chosen differently, the outcome might have been very different.
The speed of disruption continues to increase and will likely do so into the future. That means that we don’t know exactly which stocks will be winners or losers. We rely on the broad index to even the score. And so, it does. Although the lifecycle of an S&P 500 company has dramatically shortened over time, there are also companies that have been around for more than a century and are still going strong.
Members of the S&P 500 come and go based on momentum and increased/decreased valuations. But diversification into the index at large continues to mitigate our risk.
None of that keeps us from doing the perfectly human thing and falling in love with particular stock holdings. Therein lies danger and also opportunity to create legacy. Luckily, the stock my family fell in love with is a utility, known for its dividends and as a hedge against larger market downturns. In other words, regardless of what’s happening in the world, we need to keep the lights on, literally.
In 1823, the New York Gas Light Company was created. By 1882, this became Consolidated Edison, Inc., the combined services of the New York Steam Company and Edison Illuminating Company of New York. Today, Con Ed runs the largest steam system in the world, and supplies gas and electric power to more than 10 million customers in New York City and suburbs to its north.
As a stock holding, the earliest online accessible record I found of continuous dividends was 1974. That means that every quarter, good economy or bad economy, Con Ed has paid a dividend to its shareholders. That has culminated in a record dividend declared for this year of $.83 per share. Other utilities pay higher dividends (specifically Dominion, which serves Virginia and Washington, D.C.), but Con Ed offers more than respectable shareholder value.
For the record, on December 31, 1974, Con Ed closed at $1.72. Today it trades somewhere north of $90. This is far from the price appreciation of a growth stock. But it is also characterized by much less volatility than growth stocks. And that has a benefit too.
And for those who want to know if Con Ed belongs in a sustainable portfolio, the answer is, like all utilities, yes and no. You will find that the same companies that invest heavily in renewable resources also use unclean fuels and extraction methods. Con Ed understands the assignment of building a climate-resistant grid. Nobody would go easy on them if NYC went down for the count. (I remember the blackout of 1977, when Son of Sam was still at large. It was not pretty.)
This is a case of the bad guys and good guys being, environmentally speaking, the same guys.
My grandfather, Fred Moskowitz, U.S. Army doughboy in WWI and lifelong Brooklyn Dodgers fan, had no formal education. Born in 1896, he was raised on the East side of Manhattan--Alphabet City--by a single mother, Anna. We have no record of what happened to his father; abandonment by immigrants was not uncommon.
She did the best she could, commuting to Brooklyn to work for a well-to-do furrier and leaving her only child to the daycare services of the Catholic Church across the street. (This, among other reasons, is why we take the ridiculousness of my surname in stride among my clan. We are the melting pot, always have been, apparently.) Grandpa Fred worked in the printing industry before and after WWI, until his employer died.
From the time he was a boy, Grandpa Fred’s best friend was Eddie McGovern. And it was Eddie who arranged for him to get a job with Con Ed in the early 1920s, something a Moskowitz would not normally have the ability to do. Eddie and his wife, Estelle, remained close to Grandpa Fred and Grandma Margie (she of the fancy buttons) for their entire lives.
So, while the rest of New York and the world suffered terribly during the Great Depression, my Grandpa was gainfully employed, maintaining the infrastructure that is modern New York. And his mother (Anna), wife (Margie), and daughter, Jacqueline (Hurricane Jackie,) did not struggle quite so much as others.
Hurricane Jackie graduated from NYU in 1947, the first college graduate in the family and from a pricey private institution, too. Grandpa Fred retired from Con Ed in 1961 at age 65. He received, in addition to his Social Security benefit, an annually inflating pension from Con Ed until his death in 1971. And Grandma Margie received her Social Security survivor benefit and her Con Ed survivor pension until her death in 2001.
When Grandma Margie died, Hurricane Jackie inherited (at a stepped-up cost basis) Grandma’s Con Ed stock, either awarded or purchased over the years. And now, Hurricane Jackie receives the quarterly dividend on her shares. Con Ed has been keeping the lights on for my family, figuratively, for 100 years.
Aside: I want to note that employment with Con Ed still comes with a pension, and the pension still receives an annual cost of living adjustment (COLA). These are benefits worth considering when making an employment decision.
Hurricane Jackie intends for my brother and I to inherit the Con Ed stock. Her instructions are–if she needs the assets–to liquidate everything else first and sell the Con Ed last. It’s not just her income, it’s her history; a link to her mother and father and grandmother. And it’s my and my brother’s history too.
This past Friday, when the record quarterly dividend was paid, I gratefully transferred the cash to HJ’s checking account.
We may not be a family of Microsoft millionaires. We’ve done well the old-fashioned way: by saving more and spending less. But Con Ed has been awfully good to us for a century and counting. That’s a lovely reason to hold a sentimental legacy stockholding. Consider what you may want for yours. #Onlytoolateifyoudontstartnow #WeRescueOurselves #NotYoungNotDone
Reference: https://www.statista.com/statistics/1259275/average-company-lifespan/
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The information contained herein and shared by Madrina Molly™ constitutes financial education and not investment or financial advice
Sherry Finkel Murphy, CFP®, RICP®, ChFC®, is the Founder and CEO of Madrina Molly, LLC.
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As stock pickers, professionals and amateurs alike are terrible. Seriously, terrible. Like so many wise people before me, I would want you all to know that nobody knows anything about what’s going to happen. And it’s completely possible that a major player in the S&P 500 will be disrupted (think GE, now reinvented and back in the index) or a minor player on the NASDAQ (think any number of de-listed tech or bio companies) will cease to exist. There are no guarantees.