As you may or may not know, we are currently in the middle of earnings season here on the ASX. One of the companies that reported its FY21 numbers last week was Sydney Airport Holdings Pty Ltd (ASX: SYD). Today, the Sydney Airport share price is sitting at $7.73 a share, down 0.52% for the day. Since reporting its earnings on 20 August, Sydney Airport shares have… pretty much gone nowhere. The airport closed at $7.72 a share the day before its earnings were released last week. Today, they're at $$7.72.
But Sydney Airport is an old company with a long presence on the ASX boards. So today, let's check out how much $1,000 would be worth today if you invested it in Sydney Airport shares a decade ago.
So exactly 10 years ago, on 26 August 2011, the Sydney Airport share price closed at a flat $3 a share. That means $1,000 would have bought you 333 SYD shares, with a dollar left over, at this share price.
Today, those 333 shares would be worth roughly $2,570.76 on the current share price. That represents a gain of around 157%. Not a bad return!
How did dividends contribute to the Sydney Airport share price returns?
But, of course, Sydney Airport has also paid out quite a few dividends over the past decade as well. Those are very important to a shareholders' overall return.
So Sydney Airport paid a biannual dividend distribution every year from 2011 all the way to 2019. The company did not declare a dividend in 2020 and has not in 2021 so far.
A Sydney Airport shareholder who picked up 33 shares in August 2011 would have received a total of 17 dividend payments over this period, starting from December 2011's dividend of 10 cents per share, and ending with 2019's dividend of 19.5 cents per share. Over the past decade, our shareholder would have received, by this writer's estimation, approximately $2.445 in dividend distributions per share.
If this investor bought 333 shares, this would amount to a total of $814.19 in dividend income (assuming no reinvestments). Add that to our $2,570.76 worth of SYD shares, and we get a final figure of $3,384.95. That's an overall return of 238.83%.
So over the past decade, an investor was able to turn $1,000 worth of Sydney Airport shares (well, technically $999) into $3,384.95 if all they did was hold the shares and collect the dividends every 6 months.
That figure won't be perfect. There will be other considerations like franking credits, capital returns, foreign income, and some other quirky figures Sydney Airport's rather unique corporate structure has allowed that haven't been considered. But this is still a fairly accurate estimation of what Sydney Airport investors would have enjoyed over the past decade.
At the current Sydney Airport share price, the company has a market capitalisation of $20.81 billion.
