CBA’s smashing returns might surprise you…
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
It’s arguably now common ASX investing knowledge that Commonwealth Bank of Australia (ASX: CBA) shares have been on a tear for the last few years. After all, 2024 saw the CBA share price blow past countless new all-time highs, rising from just over $111 a share in January to its current record high of $161.70.
But exactly how lucrative has holding the ASX’s largest bank stock (and company) been over the past two years? That’s what we’ll dig into today.
The stunning rise of CBA shares
Let’s start at the beginning of 2023. On New Year’s Eve of 2022, Commonwealth Bank shares closed out the year at a price of $102.60 each. As such, if an investor bought $5,000 worth of CBA shares at the start of 2023 at that $102.60 price, they would have bagged themselves 49 CBA shares (we’ll round up to $5,027.40).
If we jump forward one year, it doesn’t appear like much changed. CBA began 2024 at a price of $111.80, meaning the bank rose by 6.66% (nothing superstitious there) over the year. Thus, our 49 shares would have had a value of $5,478.20 by the time New Year’s Eve of 2023 rolled around.
Of course, those capital gains were not the only returns investors enjoyed from their CBA shares in 2023. Shareholders also received the customary two dividends that the bank forked out.
As is CBA’s habit, the bank paid out an interim dividend of $2.10 per share in February, followed by a final dividend of $2.40 per share in August. Both dividends came with full franking credits attached, as they almost always do.
Our investor would have therefore also received a total of $220.50 in dividend income over 2023, bringing their total capital to $5,698.70 at the start of 2024. That’s an overall return of 13.35%.
Not a bad way to start 2024.
We’ve established that CBA shares were going for $111.80 at the start of last year. However, those same shares finished up the year at a far more lofty price of $153.25, a giant gain of 37.08%. That was after hitting the current all-time high of $161.70 in October, of course.
As such, our investor’s 49 CBA shares would have finished up the year at a value of $7,509.25.
But again, CBA forked out another two dividend payments (fully franked) last year. These were worth $2.15 and $2.50 per share respectively. That’s another $227.85 in dividend income we can add to our gains for a total 2024 return of 41.23%.
So, in conclusion, our investor’s initial $5,027.40 investment in CBA shares at the start of 2023 would have grown to $7,509.25 in 2024. Adding the $448.35 in dividends, our investor would have ended the year with $7,957.60 to their name. That’s an overall return of 58.28% over two years.
Let’s see what 2025 brings to the table for CBA’s fortunate investors.
Motley Fool contributor Sebastian Bowen 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.
