I’m a big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.
To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.
This time around I have picked out the three ASX shares that are listed below:
Although the CSL share price is trading some distance from its 52-week high, long term investors won’t be too disgruntled. Thanks to its consistently strong performance over the last decade, CSL shares have thoroughly outperformed the market return. This strong form has been driven by its successful research and development investments, the acquisition of the Novartis influenza vaccines business, its sprawling plasma collection network, and strong demand for its immunoglobulins. Over the last 10 years, CSL shares have generated an average total return of 22.5% per annum. This means a $20,000 investment into its shares in 2011 would have grown to be worth just over $150,000 today.
Domino’s Pizza Enterprises Ltd (ASX: DMP)
In FY 2010 Domino’s was operating a total of 823 stores. This comprised 522 stores across the ANZ region and 301 stores in Europe. From these, the company recorded a net profit after tax of $17.8 million. Whereas last month Domino’s released its half year results and revealed that it now operates 2,800 stores across the ANZ, European, and Japanese markets. It also just reported a first half profit after tax of $96.2 million. That’s over five times greater than the full year profit it achieved in FY 2010. In light of this, it will not be a surprise to learn that Domino’s shares have smashed the market over the last 10 years. During this time, they have generated a total return of 30.8% per annum. This would have turned a $20,000 investment into almost $300,000. Pleasingly, management isn’t resting on its laurels and is aiming to double the size of its network later this decade. This could be a sign that these strong returns aren’t ending any time soon.
Fortescue Metals Group Limited (ASX: FMG)
This iron ore producer’s shares have managed to outperform the market over the last 10 years. This has been driven by its increasing shipments and lowering costs. For example, in FY 2010 Fortescue shipped 38.9 million wet metric tonnes of iron ore with cash costs of US$29 per tonne. Whereas in FY 2021, Fortescue is aiming to ship 178 million tonnes to 182 million tonnes with C1 costs in the range of US$13.50 to US$14.00 per tonne. This has led to bumper profit and dividend growth over the period, underpinning a total average return of 15.5% per annum over the 10 years. This means that $20,000 invested into Fortescue shares in 2011 would be worth approximately $85,000 today.