Wesfarmers Ltd (ASX: WES) shares gained 2.5% on Thursday to close the session at $39.14. That still leaves the shares just a whisker above their 52-week low of $38.06 and basically flat over the past two and a half years.
In fact, over the past five years the share price has only risen 12.5%. That doesn't provide the full story however considering Wesfarmers has consistently paid out large fully franked dividends which combined with the capital growth have produced a much more respectable total shareholder return (TSR) of 8% per annum (pa).
The situation over the past decade is somewhat similar. Wesfarmers share price has actually fallen 2% in the last ten years, however, the TSR has been a positive 5.4% pa (according to Morningstar).
At that rate (by my calculations) a $10,000 investment ten years ago would today be worth nearly $17,000 today!
Considering Wesfarmers has a major exposure to coal production which has obviously suffered from an enormous commodity price crash, shareholders might be thankful that things haven't turned out worse.
It's a poignant reminder of the benefits that diversification can bring and arguably a big positive of Wesfarmers' conglomerate structure.
The 70% rise is wealth for a long-term shareholder in Wesfarmers is also a reminder of the opportunity cost which comes with investing. For example, had a shareholder instead purchased stock in Ramsay Health Care Limited (ASX: RHC) a decade ago they would have enjoyed annual TSR of 23.5%!
With much of the decline in earnings power from the coal division presumably now reflected in Wesfarmers' share price, the future for the group will likely be more reflective of the underlying performance of the retail businesses of Coles, Bunnings and Officeworks and how the board and management allocate capital.
