How much £10,000 invested in Shell and BP shares 5 years ago is now worth is mind blowing

Five years ago, Shell (LSE: SHEL) and BP (LSE: BP.) shares were really under pressure. That’s because, with the world in lockdown (due to the coronavirus), oil prices were at rock-bottom levels.

Anyone who had bought the shares at the time, however, would have absolutely cleaned up. Here’s a look at how much a £5,000 investment in each oil company back then would be worth today.

Huge share price gains

Five years ago, Shell shares were trading for around 980p while BP shares were changing hands for around 210p. Today though, we’re looking at share prices of 2,763p (+182%) and 431p (+105%), respectively.

So, ignoring commissions and taxes, a £5,000 investment in Shell would have grown to about £14,100 while £5k in BP would have grown to about £10,260. Add the two figures together and we get £24,360, which is a huge increase in value from the original investment.

Dividend income too

It gets better though. Because both of these stocks have paid out dividends to investors over the last five years.

I calculate that over this timeframe, Shell has paid out about 440p worth of dividends per share. That equates to about £2,240 in income had someone bought £5,000 worth of shares.

Meanwhile, BP has paid out about 102p per share in dividends. That translates to about £2,430 in income on the original £5k investment.

So, that’s around £4,670 in dividends in total. Add that to the £24,580 and we get £29,030 (this assumes dividends weren’t reinvested).

In other words, in the space of five years, someone could have nearly tripled their money with these two Footsie stocks. That’s pretty incredible.

For reference, a FTSE 100 tracker fund with dividends reinvested has gained about 90% over that time frame. So, £10,000 in one of these products would have grown to about £19,000.

The key takeaway

To my mind, the key takeaway here is that it can pay to invest in companies when they’re really out of favour. Often, when sentiment is weak, there are opportunities for long-term investors.

I remember that five years ago, many people were saying that oil companies were ‘uninvestable’. But look how they’ve performed since then.

It’s worth noting that there are a few areas of the UK market that are out of favour with investors today. Examples include software/data companies like London Stock Exchange Group and RELX (people investors are worried about the impact of AI) and Consumer Staples companies like Unilever, Diageo, and Coca-Cola HBC (which some are ignoring due to excitement around AI).

Worth a look today?

Are Shell and BP worth a look today? They could be.

OiI prices remain relatively low so there’s scope for a move higher. Meanwhile the two stocks have reasonable valuations and attractive dividend yields.

That said, I see oil stocks as a little speculative. That’s because, realistically, no one has any idea where oil prices are going, so it’s hard to forecast future revenues and earnings.

Given how unpredictable they can be, I personally believe there are better shares to consider buying. I think investors may be better off looking at some of the out-of-favour stocks I mentioned above.

The post How much £10,000 invested in Shell and BP shares 5 years ago is now worth is mind blowing appeared first on The Motley Fool UK.

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Edward Sheldon has positions in London Stock Exchange Group, Unilever, and Diageo. The Motley Fool UK has recommended Diageo Plc, RELX, and Unilever. 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.

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