As a long-term investor, my goal is to buy into good companies at fair prices. Hence, I’m a value and dividend investor with many undervalued FTSE 100 shares in my family portfolio. But what if an investor had bought Tesla (NASDAQ: TSLA) stock five years ago?
Tesla takes off
On Friday, 26 September, Tesla stock closed at $440.40. This values Elon Musk’s electric-vehicle company at $1.46trn. At their top, the shares briefly hit a record of $488.54 on 18 December 2024, before more than halving.
After President Trump announced hefty tariffs on US imports on April 7, the share price crashed to its 2025 low of $214.25. But like a speeding Model S luxury sedan, the shares have come roaring back. Tesla stock is up 61.2% over six months, 69.1% over one year and 224.4% over five years. These returns exclude dividends, because this S&P 500 mega-cap stock doesn’t pay out any cash rewards.
At current levels, Tesla shares look wildly expensive. They trade on over 255 times earnings, delivering an earnings yield below 0.4%. To me, this stock is priced for total perfection — unless Elon actually delivers on his dreams for self-driving cars, humanoid robots and artificial intelligence.
Barclays beats Tesla
If you’d told me five years ago that Tesla stock would be outrun by Barclays (LSE: BARC), I’d be amazed. Nevertheless, that’s the case, the Blue Eagle bank’s share price has skyrocketed since the lows of 2020.
Five years ago, the world was reeling from the pandemic. In March 2020, the US and UK stock markets had both crashed 35% from previous highs. But the announcement in November 2020 of effective vaccines against coronavirus sent global stocks soaring again.
On Friday, 26 September, the Barclays share price closed at 382.60p, valuing this British bank at £53.6bn. This is very close to its 52-week peak of 389.9p, hit on 23 September. Also, it’s a long way from the one-year low of 216.20p of 3 October 2024.
Over six months, this popular and widely held Footsie share is up 23.7%. This stock has also surged by 68.5% over one year and has soared 317.9% over five years. Thus, Barclays shares have been a better bet than Tesla over the past half-decade — and far less volatile too.
What’s more, this FTSE 100 share has paid generous dividends along the way. From 2021 to 2024, Barclays paid out a total of 29.65p per share in cash. Furthermore, this yearly payout has leapt by 40% in three years, further demonstrating how important dividends are to FTSE 100 shareholders.
My family portfolio has owned Barclays shares since July 2022, paying 154.5p a share for our holding. The shares are up 147.6% since then. However, we’ve also reinvested our dividends by buying more shares, further turbo-boosting our paper gains.
Today, Barclays stock trades on 9.4 times trailing earnings and offers a dividend yield of 2.2% a year. To me, these fundamentals suggest that this particular share is no longer in the FTSE 100’s bargain bin. Then again, we have no intention of selling this Tesla-beating British stock for the foreseeable future!
