If You'd Put $1,000 Into IBM Stock 20 Years Ago, Here's What You'd Have Today
IBM stock has been a huge disappointment for long-term investors.
Few companies are more closely associated with the rise and dominance of the American technology industry over the course of the 20th century than International Business Machines (IBM).
Indeed, the company that came to be known as Big Blue is sort of the O.G. of big tech. Founded before World War I, IBM became the industry leader in pretty much every market it entered, from early punch-card tabulating systems to electric typewriters to mainframe and personal computers.
IBM stock was a fantastic buy-and-hold bet over those many, many decades. Between 1926 and December 2019, IBM created $525.9 billion in shareholder wealth, according to research by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University. Only seven U.S. stocks generated better returns for shareholders over that span.
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Alas, times change. IBM ceded ground to any number of peers, some of which now sport trillion-dollar market values. The result? Shares in this long-time Dow Jones stock have been a major disappointment for decades.
True, as a member of the S&P 500 Dividend Aristocrats, IBM is a top-notch name for dependable dividend growth. Not only has the company paid consecutive quarterly dividends since 1916, it has increased its payout annually for 28 years and counting.
But even after factoring in those reliable and rising dividends, IBM stock has been a massive market laggard for ages.
The bottom line on IBM stock?
IBM's 20th century glory days are so much a thing of the past that the stock's performance now lags that of the broader market over any standardized time period beyond three years.
Here's the breakdown: IBM stock's all-time annualized total return (price change plus dividends) comes to 6.6%. The S&P 500 generated an annualized total return of 10.3% over the same period.
But it doesn't end there. Shares in the tech giant lag the broader market on an annualized total return basis over the past five-, 10-, 15- and 20-year periods too, and by wide margins.
So it should come as no surprise that if you invested a grand in IBM stock a couple decades ago, you would be seriously unsatisfied with the results today.
Have a look at the above chart, and you'll see that if you put $1,000 into IBM stock 20 years ago, it would today be worth about $3,500. Meanwhile, the same sum socked away into the S&P 500 over the past two decades would theoretically be worth about $6,500 today.
The bottom line? Big Blue has been a big bummer as a buy-and-hold bet in the 21st century.
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Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
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