The Motley Fool

This Blue-Chip Has Produced 200% Total Return in the Last Decade

For the last 10 years through to 28 June 2019, ComfortDelGro Corporation Ltd (SGX: C52) has given shareholders much to cheer about. The land transport giant’s total return over the period was 200%, with capital gain coming in at around 108%, according to data from S&P Global Market Intelligence. In terms of compound annual growth rate (CAGR), the total return was a respectable 11.6% per year. How did ComfortDelGro manage such a feat? Let’s find out.

Business background

Before we go any further, here’s a quick background on ComfortDelGro. The company is one of the largest land transport companies in the world, with operations in seven countries, including Singapore.

Its businesses include bus, taxi, rail, car rental and leasing, automotive engineering services, inspection and testing services, driving centre, insurance broking services and outdoor advertising. The land transport giant derives most of its revenue from Singapore. In 2018, our country contributed to 58.9% of total revenue.

Financial performance

The father of value investing, Benjamin Graham, once said:

“Investment is most intelligent when it is most businesslike.”

Before investing in any company, investors have to look beyond the share price and analyse a company’s business fundamentals. A company with strong historical growth tends to see its share price rise over the long-term. The following table shows how ComfortDelGro has performed from 2008 to 2018:

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CAGR
Revenue (S$ million) 3,120.2 3,051.8 3,206.9 3,411.1 3,545.3 3,747.7 3,680.2 3,725.7 3,635.5 3,576.4 3,805.2 2.0%
Earnings per share

(S cents)

9.6 10.5 11.0 11.3 11.9 12.4 13.3 14.1 14.7 13.95 14.0 3.9%
Total dividend per share

(S cents)

5.0 5.3 5.5 6.0 6.4 7.0 8.3 9.0 10.3 10.4 10.5 7.7%
Dividend cover (times) 1.9 2.0 2.0 1.9 1.8 1.8 1.6 1.6 1.4 1.3 1.3 N/A

Source: ComfortDelGro annual reports

From the table above, we can see that ComfortDelGro’s revenue has grown from S$3.12 billion in 2008 to S$3.81 billion in 2018, giving rise to a CAGR of 2%. Similarly, earnings per share (EPS) grew 3.9% per annum in the last decade. Total dividend per share managed to climb at a faster rate than EPS, increasing by around 8% yearly.

Furthermore, ComfortDelGro’s dividends are well-covered, providing safety to shareholders. The dividend payout has never gone above the EPS in any of the years.

The Foolish takeaway

Using ComfortDelGro as an example, we have seen how investors should approach the stock market. We should not invest without doing proper research. Some aspects to focus on would be the fundamentals of a company, such as the growth of its revenue, net profit and dividend. ComfortDelGro’s strong historical growth has indeed translated to commendable total returns for shareholders.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.