We can say that the S&P/ASX 200 Index (ASX: XJO) has had a reasonable 2021 so far as we approach the end of the year. Over 2021 to date, the ASX 200 has put on a reasonably healthy 11% or so thus far, including the 0.36% fall we’ve seen so far today (at the time of writing). But the Woolworths Group Ltd (ASX: WOW) share price has been a noticeably more successful investment over the year so far.
This ASX 200 blue-chip share has enjoyed an unquestionably successful 2021 as of today. The Woolworths share price has gained 16.41% year to date, rising from $33.89 at the start of the year to the going price today of $40.41 a share (so far today).
Those figures take into account the Endeavour Group Ltd (ASX: EDV) spinoff, but not the impact of Woolworths’ dividend payments. If we include the April interim dividend of 53 cents per share, and the October final dividend of 55 cents, these year-to-date returns hit roughly 20%.
So how has Woolies enjoyed such a successful, market-beating return? After all, it’s not often that a blue-chip share like Woolworths beats the ASX 200 by 11%.
WOW! Why have investors picked Woolworths shares in 2021?
So we can likely put Woolworths’ enviable performance down to a few factors. Firstly, its full-year results for FY2021 were arguably well received. Back in August, the company dropped its FY21 numbers. These included a 5.7% rise in group sales and a 22.9% rise in group net profit after tax to $1.97 billion.
But it also included the bump in Woolworths’ final dividend, which took the company’s total dividends for 2021 to $1.08 per share, an almost-15% increase over 2020’s payouts. It also included a $2 billion off-market share buyback program, allowing existing shareholders to sell back their shares to the company in exchange for some potentially hefty tax benefits.
This may have increased the appeal of Woolies shares for investors too.
Another factor that could have been at play is the Endeavour demerger that we touched on earlier. Endeavour was Woolworths’ pubs, bottle shops and liquor business. As my Fool colleague Mitchell covered at the time, ejecting the Endeavour assets from the company’s portfolio may have given Woolworths shares an ESG-driven boost.
Many ESG, or ethically-motivated, funds and exchange-traded funds (ETFs) exclude companies that make or market alcoholic beverages as part of their investing mandates. By offloading these assets into a separate company, Woolworths might have enjoyed an ESG-driven boost as well.
Whatever the reason for Woolworths’ stellar 2021 so far, it would have surely made many an investor happy.
At the current Woolworths share price, this ASX 200 blue chip has a market capitalisation of $48.9 billion, with a dividend yield of 2.68%.