What Makes a Company Grow?

During our Spring review meetings, I took clients back to 1964 — the year the Beatles appeared on the Ed Sullivan Show, and Ford introduced the Mustang. Since then, according to Yahoo Finance, the S&P 500 Index has grown from 84.74 to 6,845.50 as of 12/31/2025, an increase of more than 8,000%. Dividends rose from $2.58 to $78.50, a 3,000% jump. Even with Consumer Price Index inflation rising roughly 1,000% over the same period, the growth of great companies far outpaced rising costs. The lesson is simple: owning companies has historically been an effective way to beat inflation and build real wealth.

But how do companies continue growing decade after decade? We shouldn’t assume growth is automatic. Some companies decline or disappear entirely. To understand why the great ones endure, imagine you own an apple orchard.

Your livelihood depends on growing apples and selling them to buyers who turn them into juice, sauce, and other products. Each year you cultivate the land, manage the trees, and harvest the crop — assuming weather and other variables cooperate. But the orchard doesn’t grow by accident. It grows because of deliberate decisions you make.

You can expand revenue by raising prices or finding new customers. You can improve efficiency by reducing waste — for example, investing in better picking equipment that saves 5% of apples previously lost. You can diversify by opening the orchard to the public, selling pies, offering pick‑your‑own experiences, or creating seasonal events. You can increase production by adopting better fertilization methods or planting new varieties that yield more fruit. And at the end of each season, you reinvest part of your harvest — planting new trees, upgrading tools, or improving the soil — so the orchard becomes more productive over time.

Great companies operate the same way. They grow by increasing revenue, improving efficiency, expanding into new markets, innovating their products, and reinvesting profits year after year. Whether the product is apples, iPhones, or Mustangs, the pattern is the same: thoughtful reinvestment and continuous improvement create compounding growth. This is why owning the world’s best companies remains such a powerful long‑term strategy. Over time, well‑run businesses keep finding ways to grow — and their shareholders grow with them.

Any opinions are those of Landon Vick and not necessarily those of RJFS or Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete; it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decisions.

S&P 500: This index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. It consists of 400 industrial, 40 utility, 20 transportation, and 40 financial companies listed on the U.S. market exchanges. This is a capitalization-weighted calculated on a total return basis with dividends reinvested. The S&P represents about 75% of the NYSE market capitalization.

Indices are not available for direct investment. Index performance does not include transaction costs or other fees, which will affect actual investment performance. Past performance is not indicative of future results.

Every investor’s situation is unique and you should consider your investment objectives, risk, and costs before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. This is not a recommendation to buy or sell any individual security or any combination of securities. Contact your advisor regarding your particular situation before making any investment decision.