How much you have today if you invested R100 in Vodacom and MTN in 2009

Thirteen years ago, if you had invested R100 in each company and reinvested dividends, you would have received R451 from Vodacom instead of R207 from MTN.

The two biggest telecom firm in Africa, Vodacom and MTN, control the local mobile market.

Investors in South Africa that seek exposure to the telecom industry frequently have to decide between two businesses.

It begs the issue of how MTN and Vodacom have fared since Vodacom’s Thirteen-year-old JSE IPO.

The share price of Vodacom increased by 125%, from R56.75 to R127.52. It equates into a price return of 6.98% annually, adjusted for dividends.

MTN’s share price rose 17.6% during the same time frame, from R114.70 to R134.80. It amounts to a 1.4% annualized price return.

Share price growth, however, only provides a portion of the narrative.

Dividend yields for Vodacom and MTN, two equities that pay dividends, are 6.67% and 2.23%, respectively.

From 2010 to 2013, Vodacom’s dividends grew significantly before stabilizing.

The dividends has continually bought in income for investors by being kept at a high level.

MTN, in contrast, experienced exceptionally rapid dividend increase between 2005 to 2015. Since then, nevertheless, the dividend has been under pressure due to negative growth and the absence of dividend payments since 2020.

When taking into account how the dividend income affects the stock’s performance, it significantly differs.

R100 invested in 2009 with Vodacom and MTN

Calculating the return on R100 invested in each of the two firms is a simple technique to determine the value Vodacom and MTN generated for investors.

When Vodacom went public in 2009, an investment of R100 would have generated R451 if dividends were reinvested.

MTN, in contrast, would have only given investors R208, or les than half of what Vodacom did.

The following graph displays the thirteen-year return on an investment of R100 made in Vodacom and MTN.