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The math isn't as simple as taking the stock's return since the IPO date. First, we have to account for the many stock splits that McDonald's has announced over the years. A $100 investment would have yielded you 4.4 shares based on the initial price of $22.50, but McDonald's has performed 12 stock splits that cumulatively expanded share counts by a factor of 729. In other words, your initial 4.4-share holding would have grown to 3,208 shares over the decades. Based on that expanded share total, we can determine the value of your IPO investment, which would be $622,352 based on McDonald's recent closing price in early December 2019 of $194 per share.
There's another element that's at least as important as those stock split adjustments, and that's dividends. McDonald's is a Dividend Aristocrat, having paid and increased its dividend in each of the last 39 years. Dividend reinvestment is a fantastic way to supercharge your returns over long time frames, and that phenomenon is certainly true in this case.
Maybe we need to get our great grand kids to consider this strategy since they may have the time to allow for the necessary compounding.
That was a very strong one day jump...nice feeling!
Comments
4.4 share of McDonald's purchased at its IPO (1965):
if-you-had-invested-100-in-mcdonalds-ipo-heres-how Maybe we need to get our great grand kids to consider this strategy since they may have the time to allow for the necessary compounding.
That was a very strong one day jump...nice feeling!