Was it a good idea to sink money into Australia’s largest bank last year?
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Commonwealth Bank of Australia (ASX: CBA) shares have been well and truly out of form in recent weeks.
Since this time last month, the big four bank’s shares have tumbled 14%.
This has been driven by a combination of profit taking, soft results from the big four banks, and a broad market selloff.
The latter has been caused by US President Donald Trump’s trade tariffs, which has sparked concerns of a trade war that could ultimately cause a recession.
Impressively, despite recent weakness, CBA shares have still managed to deliver the goods for shareholders over the past 12 months. To demonstrate, let’s see what a $10,000 investment in Australia’s largest bank’s shares a year ago would be worth now.
$10,000 invested in CBA shares
Back in March 2024, investors were able to buy the big four bank’s shares for $116.22 a piece. This means that with a $10,000 investment, an investor could have picked up 86 shares in the bank.
While CBA shares are sadly no longer trading at their record high of $167.92, they ended last week comfortably higher than last year’s buy price.
Last week, the bank’s shares were fetching $142.36 at Friday’s close. This means those 86 shares now have a market value of $12,242.96.
That’s almost $2,250 greater than the original investment and represents a return of approximately 22.5%.
As a comparison, the S&P/ASX 200 Index (ASX: XJO) is up just 1% over the same period. Both do not include dividends.
What about dividends?
Over the period, CBA has declared two dividend payments for its lucky shareholders.
The first was a fully franked final dividend of $2.50 per share that was paid in September. Whereas the second is a $2.25 per share interim dividend that will be paid in a couple of weeks.
I’m going to include the second dividend as part of the return in this article because CBA’s shares have already gone ex-dividend for it and therefore its payment is a formality now.
This means total dividends of $4.75 per share, which pulls in dividend income of $408.50 for the 12 months.
As a result, investors that bought $10,000 worth of CBA shares a year ago, would have generated a total return of $2,651.46.
That’s a total 12-month return of 26.5%, which is vastly superior to the average market return over the same period. It also significantly outperforms one of CBA’s high interest savings accounts or term deposits.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.