Some may quibble over whether Walt Disney's (DIS -0.45%) shareholders are the happiest investors on Earth, but there's no arguing that you would be over the moon if you had been one of them since its initial public offering (IPO).
Although there are actually several times you could have gotten in "at the beginning" with the entertainment giant, most would agree that Disney's debut on the New York Stock Exchange on Nov. 12, 1957, is when the typical investor would have first been able to acquire some of its shares.
So how much would your stake be worth today if you had invested $500 in Disney's IPO that day? A lot. A whole lot.
Image source: Disney.
Setting the stage for growth
The public was first able to invest in Disney as far back as 1940, when it issued its 6% cumulative convertible preferred stock, and its shares began trading over the counter six years later. But not many American households invested in stocks back then, perhaps because memories of the 1929 crash and the Great Depression were still too raw.
The New York Stock Exchange conducted an investor survey in 1952 and found fewer than 6.5 million Americans owned stock -- just 4.2% of the population. Today, more than half of the American public owns some stock, either directly or via stock funds.
In short, few people would have thought to buy Disney's preferred or OTC shares. It was only with Disney's listing on the NYSE that the wider public had a real chance to buy a piece of this iconic American company.
Splits and dividends bolster its base
Disney went public at $13.88 per share, meaning $500 invested at the IPO would have netted you 36 shares. Over the decades that followed, the House of Mouse has split its stock on six occasions.
|
Year |
Split |
Pre-Split Price |
|---|---|---|
|
1967 |
2-for-1 |
$105.00 |
|
1971 |
2-for-1 |
$177.75 |
|
1972 |
2-for-1 |
$214.50 |
|
1986 |
4-for-1 |
$142.63 |
|
1992 |
4-for-1 |
$152.87 |
|
1998 |
3-for-1 |
$111.00 |
Data source: Disney.
Adding up all those splits would turn your original 36 shares into 13,824 shares. At Tuesday morning's prices around $186 per share, that $500 investment would be worth just under $2.6 million, and that doesn't even factor in the dividend payments Disney made over the years.
Disney began paying a dividend early on, though its policy has been at best inconsistent and is notably stingy for a company of its stature. It also paid them on a semi-annual basis rather than quarterly as most companies do. And Disney did suspend its payout last year due to the COVID-19 pandemic.
Still, over the years, a shareholder would have netted a considerable additional sum from dividends -- or, they could have used those funds to purchase more shares through a dividend reinvestment program. And however they treated those funds, they would have built up a massive nest egg from investing in Disney at its IPO and hanging on.
Rich future returns
Disney's operations have grown enormously from its start as a movie studio and theme park operator. Its various business units are also far more interconnected than they once were, so troubles in one will create ripples across the whole corporate structure.
Because of that, the coronavirus pandemic landed multiple painful blows on this entertainment empire. Some of Disney's theme parks still haven't reopened; others reopened and then were compelled to close again. Movie theaters are barely showing any films, and ticket sales for those they are screening are weak. And advertisers are only just beginning to ease up on the cuts they made to their TV commercial budgets during the depths of the crisis.
Yet despite all of this, investors have cut Disney a fair amount of slack based on their belief that the company will not only survive, but thrive as conditions return to something more like normal.
The launch of the Disney+ streaming service helped too. Disney stock is actually up 34% over the past year, and is trading almost 120% higher than the low point it hit early in the pandemic.
Sticking with this entertainment and media stock through thick and thin has proved to a wise and lucrative strategy -- both during the pandemic and over Disney's long history as a publicly traded company. Investors would probably be smart to continue sticking with Disney's stock in the future too.
