The Commonwealth Bank of Australia (ASX: CBA) share price has recorded strong gains over the past year, up 24%. This comes as Australia's largest bank navigates its way around inflationary movements and geopolitical tensions.
Below, we calculate how much a shareholder would have made if they had made an investment in CBA 10 years ago.
What if you had invested $10,000 in CBA shares 10 years ago?
If you had invested $10,000 in CBA shares on this day 10 years ago, you would have bought them for around $48.76 each. This would have given you approximately 205 shares without factoring in any dividend reinvestments over the years.
Fast-forward to today, the current CBA share price is $106.29. This means those 205 shares would now be worth around $21,789.45. When considering percentage terms, this implies an upside of 118%.
Not a bad effort, picking a blue-chip ASX share winner and more than doubling your initial investment.
How does CBA shares compare against the ASX 200?
On average, the ASX 200 has returned a yearly average of 5.42% to shareholders in the past decade. The most significant gain was achieved in 2019 when the index grew by 23.02%.
On the other hand, the biggest fall came in 2011, down by 10.84%. You might be thinking that 2020 would be on the list due to major COVID-19 disruptions, but the ASX 200 rebounded sharply during that year.
The bank's shares have outperformed the benchmark ASX 200, despite moving in circles in the past two years.
Overall, the company has delivered a yearly average return of 8.06% since 2012.
And the dividends?
Over the course of the last decade, CBA has made a total of 20 bi-annual dividend payments from 2012 to 2022.
Adding those 20 dividends payments gives us an amount of $39.16 per share. Calculating the number of shares owned against the total dividend payment gives us a figure of $8,027.80.
When putting both the initial investment gains and dividend distribution, an investor would have roughly $29,817.25.
In comparison, investing the same amount in the ASX 200 would have netted you a total figure of $16,959.77.
As you can see, investing in CBA would have almost doubled what you would have gotten from investing in the benchmark index. Although, placing your money in an exchange-traded fund (ETF) is considered to be a much safer alternative with less risk but less reward.
CBA share price snapshot
In 2022, the CBA share price has nudged up around 5% in value. However, when looking at this time last year, its shares have posted a 24% gain.
CBA has a price-to-earnings (P/E) ratio of 22.44 and commands a market capitalisation of roughly $180.67 billion.
