Returns from the FTSE 100 have been fairly uninspiring recently. The index has returned just 21.45% over the last five years with dividends included. Compared to the S&P 500, which is up 88% on the same basis, that’s a relatively weak result.
The FTSE 100’s weak performance might lead investors to think that none of its constituents are worth investing in. I think that’s a mistake. For investors who are prepared to scratch beneath the surface, the FTSE 100 includes some stocks that have put up stellar returns over the last five years.
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Don’t believe me? If I’d invested £1,000 in the S&P 500 five years ago, my holding would now be worth £1,880 (dividends included). Here are three stocks from the FTSE 100 with which I could have done better.
The first stock is Halma. Based in Amersham, the company is a collection of businesses involved in making safety equipment products.
Over the last five years, Halma’s stock price has gone up by 127%. In addition, the company has paid out 80.27p in dividends per share.
Five years ago, Halma’s stock traded at £10.89, meaning that I could have bought 91 shares for £1,000. If I’d done that, my investment would now be worth £2,252. In addition, I’d have received £75 in dividends, giving me a total return of £2,327.
Another FTSE 100 winner is Croda International. The company is based in Snaith and produces a variety of speciality chemicals used as dietary supplements and in cosmetics creams.
Croda’s stock has increased by 98% over the last five years. On top of this, the company has distributed dividends totalling £4.83 per share.
£1,000 invested in Croda International shares five years ago would have bought me 25 shares. Now, my shares would be worth £1,988. I’d also have received £120 in dividends, meaning that my investment would have returned £2,108 in total.
Last on the list is Spirax-Sarco Engineering. The company is a specialist in manufacturing steam, electric thermal, and peristaltic pump equipment. It’s based in Cheltenham.
Shares in Spirax-Sarco have increase by 132% since 2017. The company has also paid out dividends totalling £5.75.
Based on the price of the stock five years ago, I could have bought 19 shares for a £1,000 investment. Today, they would be worth £1,319 and I’d have also received £109.25 in dividends, taking my total return to £1,428.25.
Will I buy?
The FTSE 100 has lagged its US counterpart significantly over the last five years. But while the index as a whole has faltered, Halma, Croda, and Spirax-Sarco have done extremely well.
Will they continue to outperform? I’m not quite confident enough of that to buy the shares for my own portfolio just yet. But I’ll be watching these three closely for the right moment. The FTSE 100 has some stocks that have put up stellar results despite the underperformance in the index in general. That’s why I prefer individual stocks to the index in its entirety.