If I’d put £5k in Roll-Royce shares 5 years ago, here’s what I’d have now

Rolls-Royce shares have dominated in 2024, surging by triple-digits as the business makes a stellar comeback. But how much money have investors made?

| More on:

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.

Image source: Rolls-Royce plc

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Rolls-Royce (LSE:RR.) shares have been on a rampage since Tufan Erginbilgiç moved into the corner office in 2023. The engineering giant had been struggling for years under its mounting pile of debt. And after the pandemic decimated its revenue stream, the company was on the verge of bankruptcy.

Today, the story’s very different. Following some radical changes to the corporate structure, the business is finally generating meaningful operating profits again. It even achieved record-breaking free cash flow in 2023, enabling management to start paying down debts.

Seeing a business turn around so quickly is exceptionally rare. And Rolls-Royce went from being one of the worst-performing shares in the FTSE 100, to one of the best. But with all this volatility, how much money have investors made over the last five years?

Should you invest £1,000 in Amazon right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Amazon made the list?

See the 6 stocks

Created with Highcharts 11.4.3Rolls-Royce Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The value of a £5k investment in 2019

In July 2019, Rolls-Royce shares were trading close to 290p. Therefore, ignoring the impact of trading fees, a £5,000 investment would have translated into owning approximately 1,725 shares. Later that year, the company paid out a 1.58p dividend which, based on our initial investment, translates to a total of £27.26.

It’s not a game-changing sum, but by reinvesting this capital, another 11 shares would have been acquired, bringing the total to 1,736. Sadly, this is when the pandemic hit and threw a massive spanner in the works. Subsequently, dividends were outright cancelled and have yet to make a return.

So what’s the stock price been up to? After falling to a low of 35p in October 2020, shares have since exploded. They now trade close to 450p – representing a 1,186% return for those who start buying at these dirt cheap prices.

At this price, 1,736 Rolls-Royce shares are currently worth around £7,812. So for those who invested in July 2019, the stock’s delivered an impressive 56% total return. On an annualised basis, that translates to 9.3% a year, coming in slightly ahead of the typical returns generated by the UK stock market.

Is Rolls-Royce a good investment today?

With bankruptcy no longer a serious threat and operations now gushing cash, Rolls-Royce looks like an intriguing opportunity for long-term investors. After all, the travel industry’s almost entirely recovered from the pandemic, defence spending’s on the rise due to geopolitical conflicts, and nuclear power’s rising in popularity. All of these are healthy tailwinds for Rolls-Royce to profit from.

However, as encouraging as this potential seems, it’s important to keep expectations in check. A lot of these growth opportunities are already baked into the share price. Or at least that’s what the firm’s valuation would suggest. And while debt’s steadily getting under control, the group still has £2bn of net debt exposure, resulting in a £369m annual interest bill.

As a business, Rolls-Royce appears to have a promising future. But as a stock, investors may have got a bit too excited too quickly. Erginbilgiç still has plenty of work ahead of him. And right now, it’s unclear whether the group’s performance is primarily being driven by prudent leadership or a recovering macroeconomic environment. Or maybe a mixture of both.

Should you invest £1,000 in Amazon right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Amazon made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »

Investing Articles

What’s happening to the Rolls-Royce share price now?

The Rolls-Royce share price has taken a knock from US trade tariffs, but it's still gained more than 50% in…

Read more »

Investing Articles

10 UK shares that are 50% or more off their 52-week highs

These UK shares have been hit hard. And Edward Sheldon believes there could be some opportunities for those with a…

Read more »

Man smiling and working on laptop
Investing Articles

Could IAG’s share price surge over the next year? These analysts think so!

IAG's share price has sunk, reflecting growing concerns over the impact of trade wars on airline profits. Is this a…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£10,000 invested in Apple shares last week is now worth…

Apple shares are down 18% over the past week. It’s a truly phenomenal downward movement, but investors may want to…

Read more »

Investing Articles

Are shares like Tesco a safe haven for investors?

Christopher Ruane sees a lot to like about Tesco shares. But does he see them as a safe heaven in…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

The 2025 stock market sell-off could be a once-in-a-decade opportunity to build wealth in an ISA

If a long-term investor has cash sitting in an investment ISA, now could be a good time to put some…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Is now a good time to start buying shares?

Stock market turbulence can be alarming, but it can also offer opportunity. Our writer considers whether now could be the…

Read more »