If I’d invested £1,000 in Glencore shares 2 years ago, here’s how much I’d have now!

Glencore (LSE:GLEN) stock has been one of the best FTSE 100 stocks over the past few years. Switzerland-based miners and commodity traders have benefited from the energy crisis caused by the Russia-Ukraine war, as well as the disruptive effects of the pandemic on commodity markets.

In addition to the growth in Glencore’s share price, long-term investors also receive substantial passive income from the dividend yield. Today, the stock is yielding 9.28% annually. This is higher than the Footsie average.

So, if I invested £1,000 two years ago, what would I have got now? Let’s explore.

Two years back

in February 2021 it changed to +30.15%. Today, the company’s share price has ballooned to 512.10p. That’s an impressive 70% gain over 24 months.

I have not bought Glencore shares before. However, if I had invested a £1,000 lump sum two years ago, I could have bought 333 shares, leaving 50p in spare change.

My initial investment would be worth £1,705.29 today. But there is more good news. With dividend payments over that period I could add £142.74 to the total.

If I hadn’t reinvested the dividend, the two-year return on a £1k investment would be £1,848.53 today. In fact, I have almost doubled my money!

Glencore share price change

Glencore has been a good investment over the past two years. But, what about the years to come?

Well, the company still looks cheap in its current valuation despite recent astronomical returns. The price-to-earnings ratio of only 4.67 indicates there is potential for future growth. In addition, the new $1.5bn share buyback program should continue to add value to shareholders.

Coal has been the main driver of income growth. The company’s adjusted EBITDA rose 60% to $34bn, and more than half came from its coal mining business. EBITDA for this unit more than trebled to $17.9bn.

Although the decision to resist the pressure to be more environmentally friendly has greatly rewarded the company, I think it is a risk to future earnings prospects as the government seeks to replace fossil fuels with clean energy solutions.

The company has long-term plans to exit the coal market. However, it maintains guidance to maintain output at 110m tons for the next few years, which shows it is not in a hurry to do so. After the impressive returns, it is important to note that Glencore expects its 2023 earnings to be lower due to lower coal prices this year.

So, I like the company’s investments in energy transition metals, including nickel and copper. This adds multiple revenue streams, which can replace lost income from coal mining.

The legal battle is another issue weighing on the outlook for Glencore shares. Financial services outfit Legal & General has opened a new lawsuit against the commodities titan after recently pleading guilty to allegations of bribery and market manipulation.

Should I buy it?

I think Glencore shares can continue to generate good returns, but there are some risks noted. Therefore, I am not sure that we can expect extraordinary returns in the coming years.

However, I think the stock is worth buying as a useful passive income generator. If I had some cash, I would allocate a small amount to Glencore shares for their market-leading dividend yield.