The Wesfarmers Ltd (ASX: WES) share price has made strong gains over the course of the last decade.
The retail conglomerate had a market capitalisation of around $27.66 billion in 2012 before gaining traction over the years.
During 2017, Wesfarmers' worth stood at around $37.49 billion, a 35.5% increase from 2012.
However, the decision to spin off Coles Group Ltd (ASX: COL) in 2018 led the value of Wesfarmers to drop. At the time, the parent company's market capitalisation hovered at $27.24 billion – almost the same as 2012.
Nonetheless, it was a smart decision by management to recalibrate the group's portfolio in order to maximise shareholder returns. The largest demerger in Australian corporate history has paid off in the years following.
Nowadays, Wesfarmers is valued at $57.12 billion, making it the ninth largest company on the ASX.
Below, we take a look at the power of long-term investing. We will calculate how much you would have made if you invested $10,000 in Wesfarmers shares a decade ago.
What was the Wesfarmers share price in 2012?
If you had invested $10,000 in Wesfarmers shares in 2012, you would have bought them for about $20.74 apiece. This would have given you approximately 482 shares, without topping up along the way.
Fast-forward to today and the current Wesfarmers share price is $50.47. This means that those 482 shares would be worth $24,326.54. When looking at percentage terms, this implies a gain of around 143%.
While this is a solid return, let's not forget that the Coles demerger also would have given you 1 Coles share for every Wesfarmers share owned.
That means you also would have 482 Coles shares, valued at $8,560.32 based on the current share price of $17.76.
So, in total you would be sitting on $32,886.86.
And the dividends?
Wesfarmers has made a sum of 25 dividend payments including special dividends paid to shareholders from 2012 to 2022.
Adding those 25 dividends payments gives us an amount of $21.08 per share. Calculating the number of shares owned against the total dividend payment gives us a figure of $10,160.56.
On the other hand, Coles has made a total of 7 bi-annual dividend payments equating to $1.87. This gives us a figure of $901.34 from the 482 Coles shares owned as a result of the demerger.
When putting both the Wesfarmers and Coles investment gains and dividend distribution, an investor would have roughly $43,948.76.
In comparison, investing the same amount in the ASX 200 would have netted you a total figure of $17,279.72.
As you can see, investing in Wesfarmers would have more doubled what you would have gotten from investing in the benchmark index.
