It's a reasonable question: If you'd invested $1,000 in pharmaceutical specialist Bristol Myers Squibb(NYSE: BMY) five years ago in 2019, how much would you have today? You might ask that if you've been thinking of investing in the company or holding its stock for a while.
Here's the answer: From your initial $1,000 investment, you'd now have $1,324. If that looks pretty good to you, it shouldn't. That's an average annual gain of about 5.8% -- when the S&P 500 index of 500 of America's biggest and best companies averaged 12.9%.
It's always good to compare an investment's performance to a benchmark, and the S&P 500 is a common one for large-cap companies. These results show that you'd have been much better off investing in the S&P 500 instead of Bristol Myers Squibb during this period. (The average long-term annual growth rate of the S&P 500, by the way, is close to 10%.)
That's bad news for those who have been invested in the stock, but it might be good news for those considering investing -- because with the stock recently down 35% from its 52-week high, the dividend yield has been pushed up to a hefty 4.91%. Better still, that payout has increased by an annual average of about 8% over the past five years.
Remember, though, that it's far less important how a stock has done than how it's going to do. Investors need to look forward more than backward, and Bristol Myers Squibb is facing some challenges, such as patent protection expiration for some of its big sellers. The company actually exceeded Wall Street expectations with its last earnings report, but shares sank on management's subdued expectations.
You should, of course, do your own research and thinking. You might then decide that this is a terrific long-term investment opportunity that will deliver significant income.
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Selena Maranjian has positions in Bristol Myers Squibb. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.
