More than 1 million Australians became the owners of shares - many for the first time - in the 1990s when the government off-loaded institutions such as the Commonwealth Bank and Qantas, and mutuals such as the NRMA and AMP were privatised. The shares were often free or heavily discounted.
These new, accidental shareholders have held on to their shares in the belief that blue chips will outperform the market over the long term.
But analysis by Lincoln Indicators of the performance of some of the most widely held shares shows the price of many is well down on 10 years ago.
The chief executive of Lincoln Indicators, Elio D'Amato, says inertia can be costly.
"At the end of the day, it [investing in shares] is about picking good companies rather than thinking that every demutualisation is going to be a winner," he says.
As the table shows, AMP, Qantas and Telstra have lost varying amounts of their share value. The best performers include biopharmaceutical company CSL and the Commonwealth Bank.
While the table shows only share-price changes, many of the companies have paid good dividends over the years. The total return (share price appreciation plus dividends) can be much higher than the change in share prices alone suggest.
CBA
The Commonwealth Bank is by far the best performer. The first tranche of shares was listed in 1991 at $5.40. CBA shares are now trading at about $50 and, on that price, have a cash yield of 6.4 per cent, fully franked. D'Amato says the bank's shares are in the "buy" zone. "CBA is definitely the preferred bank for us at the moment," he says.
TELSTRA
Telstra, with its 1.4 million shareholders, is likely to have the largest number of small shareholders of any listed Australian company. The first tranche of Telstra shares was floated in 1997 at $3.30, which is close to today's share price. But when its dividends are taken into account, shareholders will be ahead.
The same cannot be said of those who bought Telstra in subsequent floats. Those who bought shares in "T2" in 1999 paid $7.40, while "T3" shares in 2006 cost $3.60.
Still, many analysts think that with a dividend yield of about 8.7 per cent, fully franked, the telco is still worth holding and perhaps even adding to.
CSL
Apart from CBA, the other good performer has been CSL. D'Amato says CSL is a "great company" with a "global brand that is growing". The dividends are relatively small, with a yield on current prices of 2.5 per cent and franking levels of just 4 per cent. But shareholders won't be too fussed about that, given that the CSL share price has doubled from $16 to $32 over the past decade.
AMP
AMP has been one of the real under-performers among big, widely held, stocks. It has a share price of about $4, compared with about $12 a decade ago. However, many analysts are positive on the stock, saying the company will improve its market share and make cost savings with its recent acquisition of AXA Asia Pacific.
But AMP is not on the list of stocks that Austock Securities' senior client adviser and strategist Michael Heffernan believes long-term investors should hold.
His preferred picks include Telstra, CBA, BHP Billiton, Woolworths and Wesfarmers. "In my book, they are all good companies, with a good spread of industry sectors," he says.
BALANCE
For those with only a handful of shares, the obvious industry sector most likely missing from their portfolios is resources. Those looking to diversify their portfolio could add BHP Billiton, D'Amato says.
"If you believe most growth in the world is going to come from Asia in the next three decades, BHP is a must have," he says.
How to sell shares you no longer want
The easiest and cheapest way to dispose of small parcels of shares is through company buybacks. These are usually "off market", with the price paid being the average share price during a fixed period. Usually, no brokerage is charged.
However, small shareholders tend to miss out on buybacks, either because they don't pay attention to company information or don't act on the offers. Elio D'Amato says some companies have frequent small-parcel buybacks and shareholders should contact companies directly to find out about them.
"If you have got a holding of under $500, it really does not end up being that economical holding a small parcel and having to account for it, and the time that should be spent monitoring it," he says.
The cheapest way to sell shares "on market" is through an online broker. Online trades start about $15 for casual users; it's a little less for those who trade regularly. Selling shares through a broker over the phone costs a bit more and full-service brokers typically charge $60 a trade.
The worst option is to take up the deals of dubious operators who offer to buy the shares for far less than their market value. D'Amato says many holders of small parcels of shares are vulnerable to such offers because they don't know how the market works or where the shares can be sold. "It only takes a little bit of research to check what the shares are really worth," he says.
The share price can be checked at the ASX website (asx.com.au) by entering the company name or three-letter ticker code, or by phoning the company directly. "When it comes to direct offers to buy shares, the only ones you can really trust are those that come from the companies themselves," D'Amato says.
Frequently Asked Questions about this Article…
Why have some well-known privatised or demutualised shares lost value over the past decade?
Analysis by Lincoln Indicators shows many widely held privatised or demutualised stocks have lower share prices than a decade ago. The article points out that inertia — holding shares simply because they were once free or heavily discounted — can be costly. Everyday investors should focus on picking strong companies rather than assuming every demutualisation is a long-term winner.
How do dividends change the picture compared with just looking at share-price performance?
The article stresses that total return (share-price appreciation plus dividends) can be much higher than the change in share price alone. Several big companies that look flat or down on price have paid generous dividends over the years, so shareholders who include dividends in their calculations will often be better off than the headline share price suggests.
Is Commonwealth Bank (CBA) still considered a good buy for investors?
According to the article, CBA has been the best performer among the listed examples — first listed at $5.40 and trading around $50 — and currently offers a cash yield of about 6.4% fully franked. Lincoln Indicators’ chief Elio D’Amato describes CBA as in the 'buy' zone and the preferred bank for them at the moment, making it a stock many everyday investors might consider.
What should small shareholders know about Telstra’s share performance and dividend yield?
Telstra’s first tranche was floated at $3.30, which is close to today’s price, but when dividends are included many long-term holders are ahead. The article notes later floats (T2, T3) were bought at higher prices, yet analysts point to a fully franked dividend yield of about 8.7% and say the telco can still be worth holding or adding to for income-focused investors.
How has CSL performed and what can investors expect from its dividends?
CSL is highlighted as one of the good performers — its share price doubled from about $16 to $32 over the past decade. The company is described as a 'great company' with a growing global brand; dividends are relatively small (around a 2.5% yield on current prices with about 4% franking), so investors tend to be attracted by growth rather than high yield.
What’s the situation with AMP shares and are analysts optimistic about its future?
AMP is called out as a real under-performer among big, widely held stocks — trading around $4 versus roughly $12 a decade ago. The article says many analysts are positive about AMP’s prospects, citing potential market-share improvement and cost savings from its acquisition of AXA Asia Pacific, but AMP does not appear on some strategists’ lists of long-term holds.
What are the cheapest and safest ways for small shareholders to sell small parcels of shares?
The article recommends company buybacks for disposing of small parcels — often off‑market, using an average price over a fixed period and usually no brokerage. If selling on-market, the cheapest route is an online broker (online trades start at about $15 for casual users); phone trades or full‑service brokers cost more. The piece warns against dubious operators offering far less than market value and advises checking prices on the ASX website or contacting the company directly.
How can everyday investors diversify a tiny portfolio that’s missing the resources sector?
For investors with only a handful of shares, the article suggests the resources sector is commonly missing and recommends adding a major resources stock like BHP Billiton to gain exposure. Elio D’Amato says if you believe future growth will come from Asia, owning a diversified resources exposure such as BHP is a sensible way to balance a small portfolio; other suggested long-term picks include Telstra, CBA, Woolworths and Wesfarmers for sector spread.
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