Walt Disney (DIS -0.01%) has an invaluable collection of endearing entertainment franchises. The company generated nearly $70 billion of revenue in its most recent fiscal year, with contributions from various properties such as TV networks, Hulu, theme parks, merchandise, and several billion-dollar movie releases.
It's amazing to think that this entertainment empire all started with a newspaper artist working in Kansas City nearly a century ago. Walt Disney's visionary ideas have made shareholders a lot of money. If you're thinking $1 million to $10 million, you're not even close.
Image source: Walt Disney.
A true wealth creator
The first shares of Disney were issued on the over-the-counter (OTC) market on March 8, 1940, at $5 per share. A total of 600,000 shares were offered, which gave the company a total market value of only $3 million. Walter Disney himself owned 90,000 shares at the time.
The stock split seven times, starting in 1956. Most were 2-for-1, and one share bought in 1940 would have turned into 768 shares.
A $5,000 investment would have purchased 1,000 shares in 1940. After the stock splits, you would own 768,000 shares, which would be worth $112.5 million at the current stock quote of $146.47.
A second offering came in 1957 on the New York Stock Exchange, where the company listed shares at $13.88 each. A $5,000 investment at the initial public offering (IPO) that year would have purchased 360 shares. After the stock splits, your investment would be worth $20.2 million today.
What about dividends?
Disney currently pays a semiannual dividend of $0.88 per share. If you had bought at the 1940 offering price, your 768,000 shares would earn you $1.351 million over the next year in dividends.
If you had bought shares at the IPO in 1957, you would still be earning a handsome sum of $243,302 in annual income from dividends.
The Disney magic is still alive
The Walt Disney Company is one of the most recognizable brands in the world, but it wasn't smooth sailing for Walter and his cartoon sketches a century ago. Walt's first cartoon company, Laugh-O-Grams, went bankrupt in 1923 after drowning in debt.
The breakthrough for Disney came in 1928 when the animation short Steamboat Willie was released to wide acclaim. The film featured Mickey Mouse for the first time, and Walt's new character was so popular that other businesses started paying Disney a few hundred dollars for the rights to use the character on everything from pencil tablets to toothbrushes. Disney's consumer products business was officially underway.
Disney had another breakthrough with Flowers and Trees, the first full-color cartoon, released in 1932. It won an Academy Award for Best Cartoon Short Subject, and kicked off the company's streak of releasing magical hits that continues to this day.
Very few were lucky enough to buy Disney stock at either offering in 1940 or 1957, but Disney is still a stock worth considering if you're looking to add some growth to your investments. The stock has started to move higher recently, thanks to the bright prospects for the Disney+ streaming service. Disney+ attracted more than 10 million sign-ups when it was launched on Nov. 12, and there is evidence that interest in the service is growing.
Nearly a century after Walt Disney wowed audiences with Steamboat Willie, the company is still on a roll. Recently, the Hollywood Foreign Press Association announced that Frozen 2, The Lion King, and Jojo Rabbit were each nominated for two Golden Globe Awards.
Disney's studios segment generated an impressive $11 billion in revenue in fiscal 2019 (ending in September), an 11% increase over the previous year. The upcoming Star Wars: The Rise of Skywalker will likely bring in another $1 billion for the segment.
The stock may not make you a millionaire from here, but time has proved that Disney's content doesn't go out of style. If anything, it just gets more popular with time. Given that, the stock should continue to hit new highs and generate satisfactory returns over the long term.
