A popular South African blue chip stock has delivered zero capital appreciation for investors over the past two decades, despite paying healthy dividends.
If you bought and held shares in one of the JSE’s blue chip stocks 20 years ago, your capital appreciation would be exactly zero – before factoring in the effect of inflation. In December 2003, shares could’ve been bought for around R90. Fast-forward 21 years, and shares are right back at that level (after briefly plunging as low as R30 during the Covid-19 pandemic). This means if you buy and hold, your capital appreciation would be exactly zero.
You’d have received some healthy dividends, easily more than the current share price, but these haven’t been consistent as the company faced many crises. The company made textbook mistakes, common to many South African firms, whose management teams and boards thought they were great, world-class managers. Spoiler: They generally aren’t. The South African market is tiny with little competition and benefits from protections. It had a stable South African CEO for much of the first decade of this century, during which it boomed. Following his departure, a foreign CEO was recruited, but this didn’t end well. He was replaced by co-CEOs, another decision that doesn’t usually work out well for shareholders
INVESTING STOCK MARKET SOUTH AFRICA BLUE CHIP DIVIDENDS
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