Some investors see the UK stock market as a backwater of old-economy businesses. Yet it also includes a few outstanding global outfits, such as biopharma group AstraZeneca (LSE: AZN). Anyone owning these shares over the past five years has made out like a bandit.
The shares soar
I don’t own any stock in this great British success story. But how I wish I’d held AstraZeneca stock for many years. Since the global financial crisis of 2007-09, the share price has pushed relentlessly higher.
Here’s how it has performed over eight periods:
| One week | -2.1% |
| One month | -4.1% |
| Three months | +6.6% |
| Six months | +1.3% |
| One year | +18.1% |
| Two years | +37.9% |
| Three years | +40.4% |
| Five years | +111.3% |
Apart from recent weakness, the path of the AstraZeneca share price is clear. Over six periods ranging from three months to five years, the stock has produced positive returns.
Even better, it has more than doubled in a half-decade — a period when the FTSE 100 lost 0.7%. What’s more, these figures exclude cash dividends, which recently started rising at the group.
Happy shareholders
Based on Thursday’s closing price of 11,686p, the stock is 8.9% below its 52-week high of 12,828.45p, hit on 8 March. But its strength means that it’s also 23% above its 52-week low of 9,499.21p, set on 20 October 2022.
These strong returns over sustained periods have made AstraZeneca one of the best performers among large-cap shares. Today, the group is worth £178.4bn, making it the second-largest company on the London stock market.
Moreover, its bumper return of +111.3% in five years makes it the FTSE 100’s second-best performer over this period. Brilliant.
Investing five years ago
Let’s say I had the foresight, skill or luck to invest, say, £1,000 in AstraZeneca stock five years ago. How much would I be sitting on today?
A five-year return of 111.3% would boost my initial investment to £2,113 today. But what about those dividends I mentioned earlier? Here are the group’s cash payouts for the last five financial years:
| Year | 2022 | 2021 | 2020 | 2019 | 2018 |
| Total dividend | $2.90 | $2.87 | $2.80 | $2.80 | $2.80 |
As an multinational corporation, AstraZeneca payouts out dividends in US dollars. Over the past five years, cash dividends total $14.17. Converted into pounds sterling at the current exchange rate of $1.2775 to £1, this comes to £11.09.
Investing £1,000 in mid-2018 would have bought me roughly 19 AstraZeneca shares. Total dividends paid on this shareholding over five years come to £210.71.
Now I have my answer. Buying £1,000 of this FTSE 100 star’s shares in mid-June 2018 would be worth £2,323.71 today. That’s a handsome return of 132.4%.
I won’t buy this stock now
Finally, AstraZeneca stock trades at a super-premium rating to the wider FTSE 100. It has a price-to-earnings ratio of 48.13, which is about four times the Footsie’s rating.
Also, the current dividend yield of 2.1% a year is well below the index’s yearly cash yield of 3.7%. This is a bit too pricey for me, despite AstraZeneca’s ongoing success and future prospects. And in any event, a lack of cash also prevents me from buying the shares today!
