The APA Group (ASX: APA) has arguably long been regarded as one of the S&P/ASX 200 Index (ASX: XJO)'s 'slow and steady' companies. APA owns the largest network of gas pipelines in the country. As such, investors have been attracted to the rent-like dividends that would be expected of an infrastructure company like APA. Thus, APA is often described as a 'bond proxy' share on the ASX, in line with other shares like Transurban Group (ASX: TCL).
But looking at the APA share price, we see something interesting. Back in April 2015, this was a company asking roughly $9.30 a share. Today, APA shares are going for $10.22 at the time of writing. That equates to a $1 return over the past seven years, which works out to be worth just under a 10% gain.
Now, capital gains like that might not seem too impressive for many investors. After all, the ASX 200 has returned more than 25% over a similar period.
So say an investor bought $10,000 worth of APA shares back in April 2015 at a share price of $9.30. That would have netted said investor 1,075 shares, with some change left over. Today, those 1,075 shares would be worth $10,986.50. Solid, but nothing to set the world on fire, one could say.
How much have dividends added to the APA share price's returns?
As we touched on before, many investors like to buy APA shares for the steady dividends. On current pricing, APA is offering a solid dividend yield of 4.3%. So has the dividend that investors have enjoyed from this company over the past seven years or so made up for APA's rather dull share price performance?
Well, let's dig in.
Since April 2015, APA has paid out a total of $3.235 in dividends per share. Notably, APA has raised its dividend every single year over this period. That means our investor would have received a total of $3,477.63 in dividend income as well. Add that to our principal and capital return and we get a total of $14,464.13. That works out to be a total return of 44.64%.
That's looking a whole lot more productive and gets us to an annual compounded average growth rate of 5.41%. APA's dividends usually come either partially franked at around 30%, or unfranked, so we can't add too much to those returns with franking thrown in.
That return might not impress many investors looking for maximum growth. But for investors seeking only strong, reliable income, APA's returns might be more than adequate.
At the current APA share price, this ASX 200 share has a market capitalisation of $11.93 billion.
