If you want to get rich, invest in Nebraska. Nebraska is home to five great publicly-traded companies. These companies have long histories of profitability and creating shareholder value.
Living in Nebraska for 19 years, I gained a keen insight into its business, an understanding of its politics and a love for Big Red Football. With only 1.8 million people, Nebraska relies on ingenuity, hard work and efficiency to cover the needs of its people. Nebraska has the only unicameral legislature in the country, meaning bills must go through only one house, not two, before going to the governor for signature – a sign of efficiency.
Nebraska is a state of entrepreneurs. Several years ago, The Omaha World-Herald published an article showing at least 100 families in Omaha were worth $100 million or more. Some of them got rich investing with Warren Buffett, but many of them made their fortunes by starting businesses that grew into substantial enterprises, such as Peter Kiewit (construction) Willy Theisen (Godfather’s Pizza, Inc.) and Roy Dinsdale (banking and agriculture.)
The Nebraska portfolio
Based in Omaha, Berkshire Hathaway Inc. (NYSE:BRK.A)’s stock is up 24.77% year-to-date through June 30, up 34.31% over the past year and up 39.48% over the past five years. Buffett, the chairman and CEO, has said it will be difficult to achieve the 20% average annual returns that he has earned since he took over the company because the company is so large now. He aims to continue beating the S&P 500, however. Critics are worried about the company after Buffett dies, but advocates know that Buffett has spent much of the past 10 years preparing the company for his departure. Berkshire Hathaway Inc. (NYSE:BRK.A) owns over 80 great companies, including Burlington Northern Santa Fe Railroad.
The company saw declines in shipments of coal and grain over the past year, but has made it up in the movement of crude and intermodal shipments. It would be virtually impossible for another company to build a 32,000-mile network of rail to compete against Union Pacific Corporation (NYSE:UNP). Acquiring the land alone would be cost prohibitive. Union Pacific is a stock to own for a lifetime. Union Pacific Corporation (NYSE:UNP) pays a 1.79% dividend.
The Foolish bottom line
I started buying Nebraska-based publicly traded companies in the mid-1990s and have been richly rewarded for holding onto them. I did not sell out when the recession struck in 2008, but instead bought more of these stocks, especially Union Pacific Corporation (NYSE:UNP) and The Buckle, Inc. (NYSE:BKE). I now live in Kansas, but I still have a lot of investments in Nebraska.
Nebraska is home to some of the greatest companies in the world. Warren Buffett has taught many Nebraskans how to create profits in business. If you buy these companies, hold onto them through good times and bad times. The long-term outlook for all five of these companies is excellent.
Michael Hooper owns shares of Berkshire Hathaway, Union Pacific, The Buckle and ConAgra. The Motley Fool recommends Berkshire Hathaway and The Buckle. The Motley Fool owns shares of Berkshire Hathaway and The Buckle. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article A Nebraska Portfolio for Creating Wealth originally appeared on Fool.com is written by Michael Hooper.
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