I’ve been working out how a number of our top FTSE 100 shares have been performing over the past decade. And while its great to see the massive profits from high flyers like ARM Holdings, it can be more educational to see how the allegedly slow but steady members of the index have been faring.
Boring but safe
So I’m turning my attention today to Unilever (LSE: ULVR) (NYSE: UL.US).
Unilever makes a whole host of household cleaning products, personal hygeine brands, and foodstuffs — things like Lipton, Wall’s, Knorr, Hellman’s, Lux, Cif, Sunlight, Dove, Sunsilk, Flora and Domestos and many more, with more then a dozen of its brands bringing in annual sales of more than £1bn.
A good defensive stock, then, so how well did Unilever reward its shareholders over the past 10 years?
A 2.5 times gain?
With shares changing hands for 1,000p a decade ago (allowing for a stock split in May 2006), a £10,000 investment would have conveniently covered the price of 1,000 shares. Ten years later with Unilever shares fetching 2,570p, you’d have enjoyed a whopping 157% rise to £25,700. So your initial investment would be worth more than 2.5 times as much today — and that’s a terrific performance, especially compared to the measly returns you’d have got from a savings account.
But that’s really only the start, as Unilever has been paying steady dividends every year too. Yields have come in around 3.5% to 4%, which is a bit better than the FTSE 100 average — but more importantly, the annual cash has been rising faster than inflation.
The cash
In total, if you’d stashed your annual dividends under your mattress, you’d be sleeping on a bumpy extra £6,252 by today — so you’d have had 62.5% from dividends alone, which is itself easily enough to beat cash in the bank even ignoring your massive capital gain. In total, you’d be sitting in a nest egg of £31,952.
But we’re still not finished. If you’d reinvested the cash every year instead of just keeping it, you’d expect that to bump your final total further, wouldn’t you?
But would you have expected an additional £3,794 to add to the pile?
No, 3.5 times!
Overall, with dividends reinvested, you’d have turned your original £10,000 into a very desirable £35,746!
And that’s from boring, plodding, old Unilever, and its unexciting range of soaps, tea and the likes.