At present, the total value of the UK’s FTSE 100 index is almost £2.03trn. Yet just 10 mega-cap firms account for £1trn (49.1%) of this total. The biggest Footsie company today is pharmaceutical giant AstraZeneca (LSE: AZN), whose shares have soared in recent years.
The rise and rise of AstraZeneca shares
On Friday, the AstraZeneca share price closed at 11,746p, down 50p. This values the UK’s biggest healthcare company at £180.8bn. Therefore, this business alone accounts for 8.9% of the entire FTSE 100.
Why is AstraZeneca worth so much? Because its shares have been surging for years. Here’s how the share price has performed over eight periods:
| One week | -2.2% |
| One month | +5.2% |
| Three months | +10.4% |
| Six months | +16.0% |
| One year | +11.2% |
| Two years | +56.5% |
| Three years | +43.5% |
| Five years | +135.3% |
Remarkably, the stock has produced positive returns over all periods ranging from one month to five years. The only fall was a modest decline last week.
Thanks to this outstanding performance, the shares have thrashed the FTSE 100 (+4%) over the past half-decade. In fact, this stock is the Footsie’s #1 performer over the last five years.
However, the above returns exclude cash dividends, which would add a few percentage points a year to these figures.
Investing £1,000 five years ago
To answer the question in my title: how much would I have today had I bought £1,000 of AstraZeneca stock exactly five years ago?
The shares’ 135.3% capital gain over 60 months would have turned my original £1,000 into £2,353 today. That works out at a compound annual growth rate of 18.7% a year. Nice.
However, AstraZeneca shares pay out regular dividends in US dollars. Here are the last five years’ payouts:
| Financial year-end | Total dividends | In £s today |
| 31/12/2022 | $2.90 | £2.31 |
| 31/12/2021 | $2.87 | £2.29 |
| 31/12/2020 | $2.80 | £2.23 |
| 31/12/2019 | $2.80 | £2.23 |
| 31/12/2018 | $2.80 | £2.23 |
| Total | $14.17 | £11.30 |
My table shows total dividends per share paid out over the past five years add up to £11.30.
The original £1,000 investment would have bought 20 AstraZeneca shares at just under £50 each in 2018. Thus, my total dividends would come to £11.30 times 20, which is £225.90.
Hence, my total return (capital gain plus cash dividends) from AstraZeneca stock over five years would be £2,353 plus £225.90, which equals £2,578.90.
That’s a total return of 157.9%, which works out at a compound annual growth rate of almost 20.9% a year. How I’d love to have earned similar returns from every stock in my portfolio.
What about the future?
Investors who jumped aboard the AstraZeneca bandwagon have seen the company’s revenues more than double over the past five years, leaping from $22.1bn in 2018 to $44.4bn in 2022.
Of course, there’s no guarantee that the rapid growth in both revenues and the share price will continue for another five years. But analysts highly rate CEO Pascal Soriot (appointed back in October 2012) and his leadership team.
That said, I wouldn’t buy the stock today. This is only because my wife and I already have large sums invested in FTSE 100 index trackers. And remember that AstraZeneca accounts for almost 9% of the entire Footsie. Hence, my family already has a decent stake in this great British business!
