I wrote for The Motley Fool in 2019 that FTSE 250 star Games Workshop (LSE:GAW) would be the perfect share to retire on.
The company manufactures tabletop miniatures for its action-fantasy world, Warhammer.
And it has been incredibly successful.
No rivals
The thing with Games Workshop is that it has no peers. It owns Warhammer outright.
The wargaming hobby has between 3m and 5m players worldwide.
And while it can be a costly pastime, these players are willing to spend huge sums on building their collections.
For research, I ran a straw poll of the friends of mine who got into Warhammer. I asked them how much they’d spent on the game.
“I dread to think,” said my friend James, who works as a programmer in Leeds.
“It must be approaching five figures by now.”
This is not unusual. Games Workshop suggests its target audience for Warhammer figurines is children aged 12 to 17.
But the biggest buyers tend to be parents, and those with plenty of disposable income.
Amazon deal
I don’t think Games Workshop has made the most of its intellectual property yet. But we heard news this year it had inked a deal with Amazon to produce the first Warhammer TV shows.
Looking at the performance of The Witcher developer — CD Projekt — we can parse out what Jeff Bezos’ deal may mean for the British company.
When Amazon signed a deal to produce a TV series with the Polish games studio in 2015, that popular role-playing video game had already hit 20m sales.
As of 2024, sales for the series have increased to over 75m games.
Buy and hold
That said, I’d have to be so comfortable with this FTSE 250 stock that I could look past some hefty share price falls.
From 865p in January 2005, the shares crashed to 123p in July 2008. That’s an 85% drop in three years.
2008 to 2010 was a rough time for the company. It cancelled its 19p per year dividend and for those three years focused on getting the ship back on course.
But crystallising these losses? That would have meant missing out on the run up from 123p in 2008 to 9,975p today. That’s an 8,000% increase.
In capital gains alone, without even taking dividends into account, I could have turned £5,000 into £400,000.
Time in the market
At around £100 per share, I’d need to invest £5,000 today for 50 shares. Today that would bring me £165.51 in dividends annually.
If I reinvest those gains, and add, say, an extra £1,500 per year? After 20 years I’d be sitting on a total return of £91,948.
Of course, nothing is certain in business. This calculation relies on consistent, linear projections, which can be wrong.
62% dividend hike
But the success of the Games Workshop strategy means boss Kevin Rountree has been able to whack up the dividend from 260p in 2023 to 423p in 2024.
That’s a 62% increase year on year.
And one line in particular from the CEO stands out to me.
“We sell our products globally at a profit. We intend to do this forever”, writes Rountree.
That’s a simple, repeatable plan I can get behind.
