The Motley Fool

Turn £10k Into £34k With National Grid plc

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

ng.2The other day I took a look at how well National Grid (LSE: NG) (NYSE: NGG.US) shares have done over the past year — they look set to easily beat the FTSE 100 by the end of December.

But just one year doesn’t really tell us much about the real value of an investment, so today I thought I’d work out how well National Grid has done over the past 10 years — has its combination of steady share price growth and rising dividends brought home the bacon?

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The simple answer is yes.

From September 2004 to September 2014, National Grid shares have climbed by 104% (adjusting for a stock split), so a £10,000 investment back then would have more than doubled to £20,414 a decade later. And while many impatient investors spend their days looking for quick multi-baggers, a solid portfolio of shares like National Grid held for decades is the surest way to financial happiness.

Dividends too

But one of National Grid’s strengths is its dividends — it forms a cornerstone of many an income portfolio. So what difference would the cash have made?

With dividend yields averaging more than 5.5% per year over the past 10 years, the annual cash payments alone from National Grid would have wiped the floor with interest from a bank savings account — and you’d be well ahead even if the share price hadn’t budged, never mind more than doubling!

In fact, if you’d stashed your dividend cash under your mattress over the years, you’d be sleeping £7,708 higher in the air today, and your original £10,000 would now be worth £28,122. Eat your heart out, cash ISA!

Reinvest!

But, what would have happened if you’d maintained your sleeping elevation unchanged and instead bought more National Grid shares with your dividend cash each year? As the share price has steadily risen, you’d have been buying new shares at lower prices than today — and you’d have boosted your total by a further £6,044.

That original £10,000, with all dividends reinvested, would today be worth £34,166!

And you’d be heading into your next decade with around 3,700 National Grid shares to your name, where once you only had 2,300.

The lesson

The lesson I take from this is one of my favourites — that you don’t have to choose between income and growth shares. National Grid, a stock favoured for its steady dividends, has provided very strong capital growth with those dividends reinvested. (And conversely, a pure growth share like ARM Holdings could have provided a very handsome income had you sold a modest portion each year.)

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings and National Grid. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.