The FTSE 100 index has had some strong individual performers over the last five years. From Rolls-Royce to InterContinental Hotels Group, quite a few stocks have delivered gains of more than 100%.
Interested to know which Footsie stock performed the best over this period? Read on and I’ll tell you.
The winner is…
It may come as a surprise but the best performer (in terms of share price appreciation) in the FTSE 100 over the last half decade has been private equity and infrastructure company 3i Group (LSE: III). Over the period, its share price has climbed a whopping 249%.
That’s an impressive return. It’s better than four of the ‘Magnificent 7’ have generated!
It’s worth noting that this stock has also paid dividends. Five years ago the yield was about 3% but since then the dividend payout has risen substantially.
Overall, anyone who has been invested in this company over the five-year period has absolutely cleaned up. If an investor had put £5k into 3i five years ago, that capital would now be worth over £18k.
There were signs it could soar
In hindsight, there were some indicators that this stock could potentially deliver brilliant returns. One was insider buying activity.
Back in September 2021, I highlighted the fact that Peter Wirtz and Pieter de Jong – both Co-Heads of Private Equity at the time – had just bought £950k and £1.3m worth of stock respectively. These were big director buys and they signalled that management was confident about the business.
At the time I wrote: “Both of these insiders are expert investors. The fact that they’ve spent millions on stock suggests they’re quite confident the share price is set to rise.”
Another clue was dividend growth. Over the last five years, the company has aggressively raised its payout, and higher dividends can really push a company’s share price higher.
| Year | 2020 | 2021 | 2022 | 2023 | 2024 |
| Dividend per share (p) | 35 | 38.5 | 46.5 | 53 | 61 |
Worth buying today?
Is the stock worth considering for a portfolio today? I believe so, despite the fact it has soared over the last five years.
Private equity remains a hot area of financial services today. Across the world, high-net-worth investors are scrambling to allocate capital to alternative investments and firms like 3i are benefitting.
Meanwhile, the company has plenty of momentum. One key driver here is Action – the European discount store chain that 3i owns around 80% of. In 2024, Action’s net sales and operating earnings before interest, tax, depreciation and amortisation (EBITDA) were up 22% and 29% year on year, respectively.
The rest of the company’s portfolio appears to be performing well too. In late January, management said: “We continue to see some significant growth within our other leading consumer and private label portfolio companies, more than offsetting weaker trading at a small number of companies which continue to face specific market challenges.”
Finally, the valuation remains low. Currently, the price-to-earnings (P/E) ratio here is only 7.3. That’s significantly lower than the earnings multiples on some other private equity businesses. Given the low valuation, I wouldn’t be surprised to see a takeover bid come in.
It’s worth pointing out that economic and financial market turbulence presents a risk here. If financial markets were to freeze up for some reason, 3i’s business could be impacted negatively.
All things considered though, I think this Footsie stock looks attractive today and is worth considering.
