Honeywell International (HON) vs S&P 500
How does HON compare to the market benchmark?
Why Compare to the S&P 500?
The S&P 500 is the most widely followed stock market benchmark, representing approximately 500 of the largest U.S. companies across all sectors. It's considered the gold standard for measuring overall market performance.
Comparing HON to the S&P 500 helps answer a critical question: Is this stock beating the market? If a stock consistently underperforms the S&P 500, investors might be better off with a simple index fund.
S&P 500 has outperformed HON
HON beat SPY in 1 out of 4 lump sum periods and 1 out of 4 DCA scenarios analyzed.
How Does HON Compare to the S&P 500?
The most common question investors ask is: "Would I have been better off just buying an index fund?" This comparison answers that question by tracking how $1,000 invested in Honeywell International would have grown compared to the same amount invested in the S&P 500 index.
The S&P 500 represents the 500 largest U.S. companies and is considered the benchmark for "market returns." If HON consistently beats the S&P 500, it suggests the stock has delivered alpha—returns above what you'd get from passive index investing. Our analysis shows HON has historically underperformed the market benchmark, though past performance doesn't predict future results.
Why $1,000? We use $1,000 as a round number that's easy to scale. If you invested $5,000, simply multiply the results by 5. The percentage returns remain the same regardless of the amount invested.
5-Year Growth: HON vs S&P 500 (March 2021 - March 2026)
Visual comparison of $1,000 invested in each over 5 years
$1,000 Lump Sum Investment: HON vs S&P 500
If you invested $1,000 at the start of each period, here's what it would be worth today
| Period | HON | S&P 500 | Winner | Difference |
|---|---|---|---|---|
| 1 Year | $1,209 (+20.9%) | $1,198 (+19.8%) | HON | +1.1% |
| 3 Years | $1,398 (+39.8%) | $1,683 (+68.3%) | SPY | -28.5% |
| 5 Years | $1,279 (+27.9%) | $1,791 (+79.1%) | SPY | -51.2% |
| 10 Years | $2,885 (+188.5%) | $3,802 (+280.2%) | SPY | -91.7% |
What this means: The "Difference" column shows how much HON outperformed (+) or underperformed (-) the S&P 500. The S&P 500 has outperformed HON in most time periods analyzed.
Over 5 years, $1,000 in the S&P 500 grew $512 more than the same investment in HON.
Dollar-Cost Averaging: HON vs S&P 500
Investing $500 per month into each investment over different time periods
| Period | Total Invested | HON | S&P 500 | Winner | Difference |
|---|---|---|---|---|---|
| 1 Year | $6,000 | $6,897 (+15.0%) | $6,273 (+4.6%) | HON | +$624 |
| 3 Years | $18,000 | $22,403 (+24.5%) | $22,716 (+26.2%) | SPY | $313 |
| 5 Years | $30,000 | $38,435 (+28.1%) | $42,845 (+42.8%) | SPY | $4,410 |
| 10 Years | $60,000 | $100,788 (+68.0%) | $126,352 (+110.6%) | SPY | $25,564 |
What is DCA? Dollar-Cost Averaging means investing a fixed amount regularly (like $500/month) regardless of price. This strategy reduces the impact of volatility by buying more shares when prices are low and fewer when prices are high.
Over 5 years, DCA into the S&P 500 would have generated $4,410 more than DCA into HON.
Annual Growth Rate (CAGR): HON vs S&P 500
What is CAGR and Why Does It Matter?
CAGR (Compound Annual Growth Rate) is the smoothed annual return that shows how an investment grew as if it increased at a steady rate each year. Unlike simple average returns, CAGR accounts for compounding—the effect of earning returns on your returns.
Why use CAGR instead of total return? Total return tells you the final result, but CAGR tells you the pace of growth. A 100% total return over 5 years sounds great, but that's only ~14.9% CAGR. A 100% return over 10 years is just ~7.2% CAGR. CAGR lets you compare investments across different time periods on an apples-to-apples basis.
Example: HON's 5.0% CAGR means $1,000 grew by an average of 5.0% per year over 5 years, compounding to $1,279. The S&P 500's 12.4% CAGR turned the same $1,000 into $1,791. That 7.3% annual difference compounded into $512 more for the index over 5 years.
Risk Comparison: HON vs S&P 500 (5-Year)
Comparing volatility and downside risk over the past 5 years
Risk Assessment: HON is more volatile than the S&P 500 (21.7% vs 15.3% annual volatility), meaning larger price swings in both directions.
The maximum drawdown for HON was -26.8%, deeper than the S&P 500's -24.0%. This means investors faced larger temporary losses.
Should You Invest in HON or the S&P 500?
This analysis compares Honeywell International (HON) against the S&P 500 index, the most widely followed benchmark for U.S. stock market performance representing approximately 500 of the largest American companies.
Historical Performance Summary
Over the past 5 years (March 2021 to March 2026), a $1,000 investment in HON would have grown to $1,279 (+27.9%), compared to $1,791 (+79.1%) for the S&P 500. The S&P 500 outperformed HON by 51.2 percentage points.
When HON Might Be Better
- You have high conviction in Honeywell International's future growth
- You're comfortable with higher volatility for potentially higher returns
- You want concentrated exposure to Industrials
- You're already diversified through other investments
When the S&P 500 Might Be Better
- You want instant diversification across 500 companies
- You prefer lower volatility and more stable returns
- You don't want to research individual companies
- You're investing for long-term retirement goals
The Bottom Line
The S&P 500 has historically outperformed HON across most time periods analyzed. This doesn't mean HON is a bad investment—the future could be different—but it highlights the challenge of beating diversified index funds. Many investors choose to hold both: index funds as a core holding and individual stocks like HON for potential outperformance.
Note: We use SPY (SPDR S&P 500 ETF) as the S&P 500 benchmark. SPY has a small expense ratio of 0.09% which may cause slight underperformance compared to the actual S&P 500 index over very long periods.
Frequently Asked Questions: HON vs S&P 500
Has HON beaten the S&P 500? ▼
No, the S&P 500 has outperformed HON in 3 out of 4 time periods analyzed. However, past performance doesn't predict future results.
Is HON riskier than the S&P 500? ▼
Yes, HON has higher volatility (21.7% annually) compared to the S&P 500 (15.3%). Individual stocks are generally riskier than diversified index funds because they're exposed to company-specific risks.
Should I invest in HON or an S&P 500 index fund? ▼
It depends on your goals and risk tolerance. The S&P 500 offers diversification and historically reliable returns with lower risk. HON offers potential for higher returns but with more volatility. Many investors choose both: index funds as a foundation and individual stocks for potential outperformance.
What would $10,000 in HON be worth today? ▼
$10,000 invested in HON five years ago (March 2021) would be worth approximately $12,790 today (+27.9%). The same amount in the S&P 500 would be worth $17,910.
How do I invest in the S&P 500? ▼
You can invest in the S&P 500 through index funds or ETFs. Popular options include SPY (SPDR S&P 500 ETF), VOO (Vanguard S&P 500 ETF), and IVV (iShares Core S&P 500 ETF). These can be purchased through any brokerage account.