If I’d invested £1k in this FTSE 100 gem 20 years ago I’d be up 14 times

Jon Smith stretches out his time horizon and finds a FTSE 100 stalwart that has generated solid share price returns year after year, and isn’t finished!

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A pastel colored growing graph with rising rocket.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s good to have a clear focus for generating a steady return from FTSE 100 stocks each year. And it’s also good to spy out a stock that could turn a relatively modest sum into a serious chunk of money.

It only takes one good idea to achieve this, and I’m not just talking about high-risk penny stocks. Here’s one company in the FTSE 100 that would have done just that.

The brief rundown

The stock I’m referring to is Halma (LSE:HLMA). Incredibly, the business was formed in 1894 as a tea business. In the 1900’s it switched to rubber production, before settling on the industrial and engineering company we know today.

Should you invest £1,000 in Halma Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Halma Plc made the list?

See the 6 stocks

The company operates a relatively simple business model. It owns various businesses within the group that all contribute to overall profitability. A big area is safety, such as via Fire Detection. It also has companies within Water Analysis, Gas Detection and Health Assessment.

Halma reported record profit for the 20th consecutive year via its 2022 results earlier this year. This is a definite factor that has helped the share price to grow over that time period.

There are few businesses the size of Halma that can boast the same achievement. It’s easy to grow profits when a company’s small, but to maintain this even with FTSE 100 status is no mean feat.

Generating serious profits

Twenty years ago, the share price was trading at 145p. Currently, it’s 2,146p, a gain of 1,370%. Rounding up, this means a 14x return over the two-decade time span.

Two things strike me about this. When I look at the historical price movements, it has been a remarkably linear move higher in the share price. Even though volatility has picked up in the past couple of years, for the most part this has been a low-risk stock. This shows I don’t have to take excessive risk in the hunt for above-average returns.

I’m also conscious that my return hasn’t factored in the dividend yield. For the entirety of the period in question, Halma has paid out income. For most of the early 2000’s, this yield ranged 3-4.5%.

Granted, the current 1% yield isn’t inspiring, but compound the dividends over the two decades and this further adds to the overall profit.

Pushing for more returns

Some might argue that over such a long time period any investment would have made money. This isn’t true. I accept that other stocks might have generated a greater return, but I wouldn’t be turning my nose up at the profit from Halma.

Over the same period, the FTSE 100 is up 84%. So relative to this benchmark, it’s a solid return.

The key risk going forward is that past performance doesn’t guarantee future returns. I’ve no way of knowing if the Halma share price can keep going. Yet based on the current financials and outlook, I feel investors should still consider adding Halma shares to a balanced long-term portfolio.

Created with Highcharts 11.4.3Halma Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Should you buy Halma Plc now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Growth Shares

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

2 promising UK growth stocks I’m eyeing up for May

Ever the income investor, our writer takes a step out of his comfort zone to explore the benefits of two…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

Is the Rolls-Royce share price still undervalued in 2025?

After massive growth in the Rolls-Royce share price, Charlie Carman considers whether the FTSE 100 aerospace and defence stock is…

Read more »

Businessman hand stacking up arrow on wooden block cubes
Growth Shares

Prediction: I think £1,000 invested in this UK stock could double by 2030

Jon Smith runs through a FTSE 250 stock with a market cap just over £1bn that he feels has the…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Barclays’ share price is down 7% from March, so is now the right time for me to buy?

Barclays’ share price has dipped recently, which could mean a bargain to be had. I took a deep dive into…

Read more »

Investing Articles

Down 13% since March, does this rising FTSE 250 defence star look an unmissable buy for me?

The FTSE 250 is currently home to many of the big stock stars of tomorrow and I think this high-tech…

Read more »

UK coloured flags waving above large crowd on a stadium sport match.
Investing Articles

Should I buy Aston Martin shares for my ISA while they’re under 70p?

With Aston Martin's shares down hugely across multiple time frames, this writer is wondering if he should snap up some…

Read more »

Investing Articles

Forget gold! I prefer UK shares for trying to build long-term wealth

Stock market volatility has sent investors running to safe-haven assets. But for building wealth over time, Stephen Wright prefers UK…

Read more »

Growth Shares

Yikes! This could be the most undervalued growth stock in the FTSE 100

Jon Smith flags up a growth stock with a low price-to-earnings ratio and a share price back at 2020 levels…

Read more »