Here’s how much £1,000 invested in Next shares 5 years ago would be worth now

At FTSE 100‘s Next (LSE: NXT) shares are supported by what the investment screen shows as ‘quality businesses’.

The company operates as a hybrid fashion/lifestyle retailer with online and traditional store sales. And there are well-known in the scene for clothing, footwear, accessories, beauty and home products.

Good quality indicators

We can get an idea of ​​the quality attributes of a company by looking at some frequently used indicators. For example, the return on capital runs at about 35%. And the business enjoys an operating margin of just above 19%.

In addition, the company has a steady financial and trading record, although the numbers took a deep dive during the pandemic. But that was no surprise to the retailer as it was a shock to all sectors at the time.

In short, Next is perhaps a desirable stock for investors to hold in a diversified long-term portfolio. And the only question to consider is the price. After all, even quality businesses can make poor investments if we pay too much for them.

But do quality investments really pay off? And have Next’s undeniable attributes been used to preserve shareholder wealth over the past five years? Here’s a spoiler – yes, they have!

Five years ago, we could pick up a few shares for 4,614p each. And as I write on Thursday 2 March, they are changing hands at 6,874p. So the gain on the share price is 2,260p.

But that’s not all. The company has a good dividend record. And during that time, shareholders will collect payments totaling 790.5p per share. So that can be added to the increase in share price to give a total gain of 3,050.5p per share, or around 66%.

A tough year ahead

Therefore, a £1,000 investment in Next shares five years ago would now be worth around £1,660. Although the trading costs will reduce the value if it will be sold in full by selling the stock now.

However, Next has performed like a strong one and will be a good support in the portfolio through difficult times.

And, expect, it seems that the business will give more to the shareholders in the long run. Although nothing is guaranteed, as a quality company with a strong trading niche may experience operational difficulties from time to time.

However, the trading statement posted on January 5 was optimistic. At the time, the business was only experiencing better-than-expected sales over the Christmas period. Although the director is also careful for next year which will end in January 2024.

The best estimate is that full-price sales will end the year down 1.5%. And they expect annual pre-tax profits of around 7.6%. Meanwhile, City analysts expect earnings to fall by around 10% this year.

Investors may like to dig in with more in-depth research today. And we’ll get another update from the company with its full-year results report due on March 29.