The ANZ (ASX:ANZ) share price has only gained 10% in 5 years. But have the dividends paid off?

We do the math to see if it has been worth investing in ANZ shares over the long term…

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has moved higher over the past 5 years. This comes after the banking giant's shares dropped to a decade-low caused by the economic fallout from COVID-19. Since then, along with the broader share market, ANZ shares have made a turnaround, recovering during mid-2020 and early 2021 to pre-pandemic levels.

This time 5 years ago, on 30 July 2016, ANZ shares were trading at $25.25. At the time of writing, the ANZ share price is sitting at $27.75, around a 10% increase. While this may seem reasonable, other blue-chip shares such as Fortescue Metals Group Limited (ASX: FMG) and BHP Group Ltd (ASX: BHP) have considerably outperformed ANZ. They have risen 476% and 166%, respectively over the same 5-year period.

Furthermore, many investors consider their investment to have performed well if it delivers an average 10% per annum rate of return or more. And on that basis, some shareholders may be feeling disappointed with the returns of the ANZ share price over the past 5 years.

However, let's take a look at what sort of returns an ANZ shareholder would have made over 5 years also factoring in the banking giant's dividends.

ANZ dividend history

Below is a list of ANZ's previous dividends paid out to shareholders over the past 5 years.

  • December 2016 – 80 cents (30% franked)
  • July 2017 – 80 cents (30% franked)
  • December 2017 – 80 cents (30% franked)
  • July 2018 – 80 cents (30% franked)
  • December 2018 – 80 cents (30% franked)
  • July 2019 – 80 cents (30% franked)
  • December 2019 – 80 cents (70% franked at 30%)
  • July 2020 – 25 cents (30% franked)
  • December 2020 – 35 cents (30% franked)
  • July 2021 – 70 cents (30% franked)

What sort of returns would an investor have made?

For argument's sake, let's say an investor bought $10,000 worth of ANZ shares 5 years ago. The investor would have received approximately 396 shares (at $25.25 per share). If we take those 396 ANZ shares and multiply them by the current ANZ share price ($27.75), the investor's holding would be worth only $10,989.00 (396 shares x $27.75) today.

With a paper gain of just $989.00, let's now factor in the accumulated dividends from July 2016.

When calculating the above dividends, our investor would have received a total of $6.90 for every ANZ share owned. Multiply this by the current holding of 396 shares, and this equates to $2,732.40.

Adding this to the $10,989.00 that is the present value, and the investor would have a total of $13,721.40 ($10,989.00 + $2,732.40).

In essence, this means the investor would actually be 37.2% ahead if they had invested in ANZ shares in July 2016. This figure also does not take into account the benefit of franking credits, which can serve to reduce the amount of tax an investor pays, thereby adding to their overall returns.

ANZ share price snapshot

Looking at a much shorter time frame, the ANZ share price has jumped in the past 12 months, up 50%. In 2021, the company's shares are also in positive territory, up 22%.

ANZ has a market capitalisation of roughly $79 billion, making it the seventh-largest company on the ASX.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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