I’ve been looking at initial public offerings (IPOs) recently to see how you would have fared if you invested in them.
The last one I looked at was Altium Limited (ASX: ALU), which has rewarded its IPO investors handsomely over the last couple of decades. This is even after a few major hiccups over the years.
Today I thought I would take a look at private hospital operator Ramsay Health Care Limited (ASX: RHC).
Ramsay Health Care.
Ramsay Health Care came into existence in 1964 when founder Paul Ramsay purchased a guesthouse on Sydney’s North Shore called Warrina House and converted it into a psychiatric hospital.
Over the next decade and a half the company expanded its psychiatric hospital business before diversifying into medical and surgical businesses. In 1978 the company built its first surgical hospital – the Baringa Private Hospital in Coffs Harbour.
Fast forward to today and Ramsay is one of the largest healthcare companies in the world with a total of 480 facilities across 11 countries.
The Ramsay IPO.
In September 1997 Ramsay Health Care floated on the Australian Stock Exchange.
Details of the IPO are surprisingly limited, but according to Yahoo Finance, Ramsay’s shares were trading at an adjusted price of $1.15 on September 30 1997.
This means that $10,000 invested into Ramsay’s shares on that date would have yielded you 8,696 shares.
This afternoon Ramsay’s shares are changing hands at $67.22. Which means those 8,696 shares have a market value of almost $585,000 today.
In addition to this, although Ramsay has deferred its dividend for FY 2020 due to the pandemic, in time I expect its dividend to return to normal and then begin its growth trajectory again.
This will be good news to long term investors, because in FY 2019 the company paid dividends of $3.30 per share.
This means those 8,696 shares generated total dividends of $28,700 in FY 2019. Not bad for a $10,000 investment back in 1997!
While I think that Ramsay remains a great long term investment option, I suspect these dirt cheap shares might provide stronger returns for investors.
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More reading
- ASX 200 climbs 1% in positive start to the week
- Why the Ramsay share price is climbing
- How to invest $5,000 in ASX 200 healthcare shares today
- 5 ASX 200 winners and 5 losers of the week
- These small cap ASX shares could be stars of the future
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post If you invested $10,000 in the Ramsay Health Care IPO, this is how much you’d have now appeared first on Motley Fool Australia.
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