Qantas Airways Ltd (ASX: QAN) shares have delivered a strong return for long-term investors over the past decade.
That may surprise some people.
Airlines are not usually thought of as easy buy-and-hold investments. They are exposed to fuel prices, labour costs, competition, aircraft availability, economic conditions, and travel demand.
Qantas also had to navigate the COVID-19 pandemic, which severely disrupted global aviation and forced airlines into survival mode.
But investors who bought a decade ago and held on have been well rewarded.
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The share price return
In May 2016, Qantas shares were trading at around $3.25. This means that a $1,000 investment would have bought approximately 308 Qantas shares.
Today, the company's shares are priced at $9.10.
This means those 308 shares would now be worth approximately $2,803
It means the value of the shares alone has increased by close to 180% over the past decade.
That is despite Qantas going through one of the most difficult operating periods in its modern history in 2020. Border closures, grounded aircraft, weak international travel, and pandemic uncertainty all weighed heavily on the airline sector.
Many companies would have struggled to recover from that kind of shock.
Qantas did not just survive. It eventually returned to profitability, resumed dividends, and continued returning capital to shareholders.
Dividends made a difference
The capital growth is only part of the story.
According to CommSec, Qantas paid several dividends over the period, although payments were interrupted for a number of years around the pandemic.
Since the final dividend paid in 2016, Qantas has paid total dividends of $1.356 per share.
For an investor holding 308 shares, that would add approximately $418 in cash dividends.
That figure excludes the value of franking credits. It also assumes the investor took the dividends in cash rather than reinvesting them.
When the current share value and dividends are added together, the original $1,000 investment would now be worth approximately $3,220.
That is a very strong result for a cyclical airline stock.
Share buybacks helped too
Another factor worth noting is Qantas' use of share buybacks.
Buybacks do not show up in the same way as dividends for an individual shareholder. Investors do not receive cash directly unless they participate in an off-market buyback.
But buybacks can still be important. By reducing the number of shares on issue, they can support earnings per share and potentially help the market place a higher value on the remaining shares.
Qantas has undertaken several buybacks over the past decade, and this would have contributed to the overall shareholder return story.
Are Qantas shares still attractive?
I think Qantas remains an interesting ASX share today.
The airline has a strong position in Australian aviation, with Qantas and Jetstar giving it exposure across premium and lower-cost travel. Its loyalty business is also a valuable asset, and fleet renewal should support the customer experience and operating efficiency over time.
But I would still treat Qantas differently from a defensive blue-chip share.
Airline earnings can move quickly when fuel prices rise, competition increases, or demand softens. Investors need to be comfortable with that cyclicality.
Even so, the past decade shows what can happen when a business with a strong market position gets through a crisis and starts returning cash to shareholders again.
Foolish takeaway
A $1,000 investment in Qantas shares a decade ago would now be worth approximately $3,220, including cash dividends but excluding franking credits.
That is an impressive outcome.
Qantas shareholders had to sit through a very difficult period, including the pandemic disruption that hit airlines hard. But the combination of share price growth, dividends, and buybacks has produced a strong long-term return for those who stayed patient.
