Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries
Image: Ai
If you invested R1 000 in FirstRand shares five years ago and reinvested all dividends (excluding the effects of inflation), your investment would now be worth about R2 378. This includes both share price appreciation and the compounding effect of reinvested dividends.
That gain, of R1 378, is the equivalent of a quarter of the cost of an average food basket, based on May figures from the Household Affordability Index, published by the Pietermaritzburg Economic Justice & Dignity Group.
The Group's report indicated that the national minimum wage in May, based on 21 working days, is R4 836. The average cost of a household food basket, in the same month, is R5 466.
The Pietermaritzburg Economic Justice & Dignity Group's food basket tracks 44 basic food items, including a range of essentials like maize meal, potatoes, tomatoes, bananas, and various other fruits and vegetables, as well as staples like bread and milk.
IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Overall, dividends earned and reinvested over the period contributed an additional R593 to your investment value.
This calculation is based on a five-year share price increase of about 78.7% and an average annual dividend yield of roughly 5.9%, with dividends reinvested each year. In contrast, the JSE's All Share Index has climbed some 81% over the same period.
Dr Azar Jammine, director and chief economist at Econometrix, pointed out to IOL that the Index was worth some 7 000 points at the turn of the century and is now heading towards 100 000.
FirstRand started out as FNB, which claims to be South Africa's oldest bank. Its history can be traced back to the Eastern Province Bank formed in Grahamstown in 1838.
Initially the Eastern Province Bank, FNB was established in Grahamstown and initially focused on financing the wool export boom in the district. It later hit a wobble and was acquired by the Oriental Bank Corporation in 1874, which was later bought out by the Bank of Africa in 1879.
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