Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

If You Invested $500 in Boeing's IPO, This Is How Much Money You'd Have Now

By Lou Whiteman - Nov 21, 2019 at 8:16AM

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

Buy-and-hold investors who got into Boeing early have done very well over the years.

Boeing ( BA -0.33% ) is one of the pioneering names in aviation, and the company in recent years has been one of the top-performing stocks among industrial companies. Boeing shares have gained more than 145% over the past three years, easily outpacing the S&P 500's 44% gain, and the shares are up more than 600% over the past 10 years.

Investors who bought in 2009 are undoubtedly pleased with their investment. But how much could you have made if you bought in during Boeing's initial public offering?

By the numbers

Boeing began trading on the New York Stock Exchange on Jan. 2, 1962, according to data provided by the company's investor relations department. The shares traded for $0.8230 apiece that day, so $500 would have bought about 607.5 shares. The company completed eight stock splits between 1966 and 1997, and paid a dividend at the end of every quarter since listing on the exchange.

A Boeing 787-10 in flight.

Shares of Boeing have soared over the years. Image source: Boeing.

Presuming you reinvested those dividends and accounting for the splits, the adjusted price on the first day of trading was $0.1466 and you would now own more than 3,400 Boeing shares. Based on Boeing's $371.68 share price at close of business on Nov. 15, that original $500 investment would now be worth more than $1.268 million. That's a compound annual growth rate of more than 14%.

Boeing has had its share of ups and downs during that time, building products that helped launch the golden age of commercial aviation, powered NASA into space, and helped the Pentagon win wars, but also experiencing setbacks including a failed supersonic to rival the Concorde and, more recently, issues with the 737 MAX. But an investor who held steady through the highs and lows would have done quite well, a reminder of Motley Fool co-founder David Gardner's advice to hold steady because over time, winners win.

A storied, twisting history

It's probably not a surprise that Boeing's history dates to well before its public listing, but many don't know how much of the modern U.S. aviation industry was once tied together under the Boeing name. William E. Boeing, a Seattle-area timber exec with an interest in flying, started Pacific Aero Products Co. in 1916, renaming it Boeing Airplane Co. a year later. The company's first product, the Model C, was used by the U.S. Navy in the later stages of World War I.

Two men pose in front of a Model C seaplane.

William Boeing (with mailbag) and pilot Eddie Hubbard pose in front of the Model C in 1919. Image source: Boeing.

Boeing spent the next decade-plus consolidating the young aviation industry. The company merged its Boeing Air Transport with a handful of other smaller airlines to form United Airlines, which provided coast-to-coast airmail service. Boeing also consolidated engine maker Pratt & Whitney, Sikorsky helicopter, Chance Vought, and other airplane component manufacturers.

The U.S. government forced the breakup of Boeing via the Air Mail Act of 1934, which prohibited airlines and aircraft manufacturer combinations. The airline assets were split off and became the forerunner of the modern United Airlines Holdings, while the manufacturing operations were split at the Mississippi River.

The western assets retained the Boeing name, and form the heart of the modern company. The eastern assets, including Pratt & Whitney, became United Technologies, which expanded into several other industries and currently has a deal pending to merge its aerospace business with Boeing competitor Raytheon.

The new Boeing continued to consolidate over the years, regaining a helicopter division lost in the UTC split via a 1960 purchase of Vertol Aircraft and all but taking over the domestic commercial airline market with its 1996 purchase of McDonnell Douglas.

William Boeing ended his formal association with the company around the time of the breakup and was said to have divested most of his shares around that time. If not, his estate would have generated returns well in excess of what IPO buyers have enjoyed.

What do the next 57 years look like?

Today's Boeing, a behemoth with $100 billion in sales, enjoys a duopoly with Airbus in commercial aviation and ranks as one of the top defense companies supplying the U.S. government. Its 787 Dreamliner is setting flight distance records, and its total backlog equals more than a half decade's worth of production.

Workers constructing a wing by hand in a Boeing facility.

Boeing has come a long way from the days of workers handcrafting canvas and wooden wings for biplanes. Image source: Boeing.

It is also a company shrouded in controversy after its much-anticipated 737 MAX was involved in two fatal crashes, leading to a grounding that is still in effect as of this writing and is expected to add up to billions in customer penalties and other expenses. Its 777X, another promising model in development, has had its own setbacks. And the defense arm in 2018 was subject to a rare public tongue lashing by the Air Force secretary at the time, Heather Wilson, due to delays and issues with a new tanker aircraft.

For the time being, I've advised not investing new dollars in Boeing until management works out the issues in internal processes and proves it has control of the company's sprawling portfolio. But I do have faith in the strength of the underlying portfolio and see no reason to sell now whether you've held since 1962 or bought last month.

Boeing's next half-century might not produce the same gains as the first 50 years, but over time the stock is likely to continue to gain altitude.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
BA
$197.85 (-0.33%) $0.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.