Wm. Morrison Supermarkets (LSE: MRW) (NASDAQOTH: MRWSY.US) is the supermarket to be shunned these days, if its share price collapse is anything to go by — over the past 12 months, it’s slumped by 44% to 153p.
But that crash is relatively recent, and over the five years leading up to mid-2013, the share price was actually largely unchanged. That’s not the best of results, but there were dividends too — reaching around 4% in the last three years.
A 10-year investment
So what would a £10,000 investment in Morrison at the end of September 2004 have done for you in the following 10 years?
You’d have paid around 193p for your shares back then, and by the end of September this year they’d be worth just 168p apiece. So without considering dividends, you’d be left with shares worth just £8,705 — you’d have lost 13%.
But the dividends would have saved you from a loss. Yields in the early days were low but the share price was higher, and you’d have accumulated £3,685 to add to your total to take it to £12,390.
Beating the bank?
A 24% return from a stock investment over 10 years is pretty disappointing, but at least it would have comfortably beaten a bank savings account — at least if you’d kept the cash.
But the bad news is that if, instead of keeping it you’d reinvested it in new Morrison shares each year, you’d have done worse.
With the slump being only recent, your average buying price over the decade would have been higher than today, and you’d have lost £807 by reinvesting in falling shares. So your final result would have been a meagre 15.8% gain, turning that original £10,000 into just £11,583.
And that was for the ten years ended 30 September — but since then, Morrison shares have fallen further.
A £600 profit!
From 30 September 2004 until 23 October this year, the share price has lost another 21p, and your reinvestment loss would have been worse too — £10,000 back then would be worth only £10,619 today.
Still, at least you’d be starting off the new decade with 6,940 shares instead of the 5,180 you started with, so if there’s a recovery coming you’ll be sitting pretty. If.