Reviewing Andrew Carnegie's Early Stock Portfolio

“Thirty three and an income of $50,000 per annum!”

These were the words written by future billionaire Andrew Carnegie.

Long before the public knew him as “The Star Spangled Scotsman” or the “Patron Saint of Libraries,” Carnegie was a lowly telegraph messenger earning $2.50 per week.

But, Carnegie dreamed big and set his sights on accruing $50,000 per year in recurring passive income. Money he planned to make through buying and holding high-yield dividend stocks.

Carnegie’s initial goal was to use this money so that he could study philosophy and “take a part in public matters.”

Basically, he wanted to spend his days reading books and debating strangers.

My how the times have changed!

After doing some research, I found several early stocks that Andrew Carnegie owned.

I thought it would be fun to track how these companies progressed over the years. And to see whether any of these firms are still around today.

1. Adams Express Company

This is Andrew Carnegie’s first ever stock investment, and a dividend stock at that!

At 28 years old, Carnegie had the opportunity to buy 10 shares of Adams Express Company at a price of $60 each. He used $100 of his own money and convinced his mom to mortgage her house for the remaining $500.

Adams Express Company was a freight and cargo business that transported letters and packages. This was a bit like the FedEx or UPS of its time.

Interestingly, this firm has a unique place in American history due to an incident in 1849 where a slave named Henry "Box" Brown shipped himself north to freedom via Adams Express.

Carnegie bought the shares for their monthly dividend. Owning 10 shares of Adams Express Company netted Carnegie $6 per month in passive income. These dividends also sparked Andrew Carnegie’s interest in owning assets and being a shareholder in a business rather than simply being an employee.

Adams Express Company is still around.

Although today, it is known as Adams Diversified Equity Fund ($ADX) and is a closed end holding company of stocks like NVIDIA and Microsoft. This fund still pays shareholders, and Adams Diversified Equity Fund has issued a dividend every year for 90 consecutive years.

2. Woodruff Sleeping Car Company

Bolstered by his investment in Adams Express, Carnegie saw another opportunity.

In 1858, Theodore L. Woodruff invented the railroad sleeping car. However, his invention was limited in scale, until Woodruff met Andrew Carnegie.

Carnegie became Woodruff’s business partner and secured the loans needed to create and grow the Woodruff Sleeping Car Company. By the end of 1858, eight midwestern railroads were running Woodruff’s sleeping cars.

Carnegie’s initial investment in this business was $217.50.

But by helping grow the Woodruff Sleeping Car Company, Carnegie was able to scale his investment to roughly $5,000 per year in dividend income.

Carnegie later cashed out for a windfall profit by arranging a merger between the Woodruff Sleeping Car Company and the Pullman Company.

And if you’re curious, the Pullman Company is still around. Today, Pullman is a subsidiary of Bombardier Inc. ($BDRBF), a Canadian company that makes jets, trains, and snowmobiles.

3. Columbia Oil Company

After the Pullman merger, Carnegie invested his money into oil.

At this time, oil was not a major fuel source for vehicles. However, oil was a key component in America’s illumination industry. Towns and households used kerosene as a fuel source to light lamps and heat furnaces.

Carnegie purchased 1,100 shares of the Columbia Oil Company. This was a petroleum producer with a field located in Titusville, Ohio.

The Columbia Oil Company paid four dividends in 1863. The first dividend had a 30% yield, the next two 25% yields, and the fourth and final was a 50% yielder. Carnegie’s exact profits from this investment are somewhat unclear. However, historians estimate that Carnegie invested approximately $11,000 into the venture and earned roughly $17,868 from his first year of dividend payments.

Carnegie remained a long-term shareholder and the Columbia Oil Company continued to pay him for many years. In 1868, for example, Carnegie collected $2,000 in dividend income from the firm.

The Columbia Oil Company is no longer around. Over the years, this business had a somewhat convoluted history of mergers and acquisitions. The firm was bought by Standard Oil, now Exxon Mobil Corporation ($XOM). Then, it was later part of Quaker State, which is now a division of Shell plc ($SHEL). And ultimately, Pennsylvania General Energy bought the oil field.

Conclusion

There are two takeaways from Andrew Carnegie’s dividend portfolio.

The first?

Dividends matter.

Carnegie used the cash flow from his holdings to finance even larger investments. And he also held some of these businesses long-term as a consistent source of passive income.

The second takeaway?

Buy and hold investing works.

Buying and holding for the long-term is often derided by haters who cite companies like RadioShack or Blockbuster as proof that this strategy doesn’t work. Yet, there are thousands of successful companies that were founded decades, or even centuries, ago.

Perhaps the best example of this is that Voya Corporate Leaders Trust, a fund that hasn’t bought a single new stock since 1935.

Voya’s original holdings included such gems as American Can, Socony-Vacuum Oil Company, and National Biscuit. Many of these firms no longer exists. But, that’s because they were acquired by other businesses that are extremely successful.

Socony-Vacuum Oil Company is now Exxon.

National Biscuit is Mondelez International.

The fund even ended up with Berkshire Hathaway stock through its stake in Burlington Northern and Santa Fe Railway.

Over the long term, the Voya Corporate Leaders Trust has generally kept pace with the S&P 500, largely because many of its old-time holdings were eventually bought out. Each acquisition effectively handed the trust shares of newer, faster-growing companies, allowing the portfolio to evolve without actively buying more stocks.

Likewise, almost every stock Andrew Carnegie was holding 100+ years ago is still around, in some form, today. Adams Express Company shareholders would now have a stake in Adams Diversified Equity Fund. The Woodruff Sleeping Car Company ultimately became Bombardier Inc.. And even a position in the Columbia Oil Company resulted in exposure to many different petroleum stocks over the years.

If you want an old-school dividend-investing role model, look no further than Andrew Carnegie.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.