(BFM Bourse) – Like every year, BFM Bourse reveals its ranking of the most profitable stocks in the flagship index of the Parisian market.
No change of headliner and yet a transfer of power within the CAC 40. This is what emerges from the 6th edition of our BFM Bourse ranking of the most profitable stocks in the CAC 40. After the plunge of 9, 5% in 2022, the CAC 40 largely raised its head last year with an increase of 16.5%. Global markets were notably buoyed by the end of the rate hikes by the major central banks and then the hope that they would soon reduce them.
The CAC 40 even broke all its historical records in 2023, during the session (7,653.99 points on December 14) and at the close (7,596.1 points on December 15). With this surge, the average annual return (dividends included) of the CAC 40 over the last five years (from 2019 to 2023) rises to 11.18%. Over a period long enough to be significant (five years), the stock market therefore seems to be able to withstand all crises, whether Covid, the war in Ukraine or soaring inflation.
After the very good stock market year 2023, the average annual return practically doubles compared to the previous five years (6.08% per year over the period 2018-2022). This is a little worse than over the period 2017-2021 (12.48% per year), but better or as good as the previous periods: 8.96% per year from 2016 to 2020, 11.18% per year. year from 2015 to 2019 and finally 7.76% per year from 2014 to 2018.
As every year, the principle of our ranking is to adopt the point of view of the small investor to highlight in the clearest way possible the average annual return of each stock over the last five years. Let here be from the beginning of 2019 to the end of 2023, an investment period long enough to be representative. Certainly, past performances do not predict those to come: a stock that has had a good period can completely turn around later. This is once again what we saw in 2023 with very different reactions to high rates depending on the sector. However, this ranking, adopted at the end of 2023, aims to enable informed choices to be made. It should also be noted that “stock-picking” (the selection of stocks one by one) should be reserved for the most informed investors.
We have established a methodology (explained point by point at the end of this article) which aims to be as close as possible to the reality of the individual shareholder. In other words, someone who buys a share at a given time and sells it after five years, while pocketing the dividends over time. On the other hand, we assume that dividends are not reinvested in the acquisition of additional shares, a strategy to which few individual shareholders actually follow. Finally, the return displayed is gross, that is to say before tax and does not take into account any management fees.
The comeback of industrialists
Last year, high interest rates and the slowdown in the Chinese economy hit luxury stocks hard. Certainly, Hermès remains for the second consecutive year the most profitable stock in the CAC 40, with a return of 32.14% per year (!), dividends included, over the last five years.
To give you an idea, if you had bet 1,000 euros on Hermès at the start of 2019 and you had sold everything at the end of 2023, you would have recovered between the resale of the stock and the dividends practically 4,030 euros.
But behind the best student, the other luxury values drop clearly: LVMH goes from 2nd to 4th place in our ranking (compared to our 2023 edition), L’Oréal from 7th place to 9th position, and Kering from 13th to 33rd place. It should be noted, however, that LVMH, the world leader in luxury, is the only CAC 40 company that has remained in the top 5 of our list every year since the first edition (2014-2018).
Two tech stocks (in the broad sense) are going the opposite way and taking their revenge. These are STMicro (29.94% return per year from 2019 to 2023, still including dividends) and Schneider Electric (24.74% per year over the period).
In the top 10, we will also note the breakthrough of Stellantis (5th with 20.61% return per year), whose share experienced the largest increase in the CAC 40 last year, Saint-Gobain (20.12 %) and Air Liquide (19.28%). This is the great return of the industry to the heart of the top positions.
If we look at the composition of our top 10, there are still three luxury stocks (Hermès, LVMH and L’Oréal), three stocks associated with tech (STMicro, Schneider Electric and Capgemini), three industrial stocks (Stellantis, Saint-Gobain and Air Liquide) and finally a media value (Vivendi*). The top 10 is therefore generally more balanced between sectors than in previous years, where tech and luxury crushed everything in their path.
Nearly -11% per year for Alstom
Among the biggest losers, we can cite Teleperformance, which went from 5th to 36th place, or even Dassault Systèmes (from 6th to 11th).
Only four CAC 40 groups still show negative annual returns over the last five years (compared to 10 in the previous edition): Orange***, Renault, Unibail-Rodamco-Westfield and Alstom which brings up the rear (-10, 83% annual return between 2019 and 2023).
*Vivendi disputes our methodology, considering that the dividend paid during the split with UMG in September 2021 should not be adjusted with the historical price revision ratio applied by Euronext at the end of the transaction. A historical price revision ratio retained by Euronext of 2.4198 was in fact applied on September 21, 2021 for Vivendi. We apply the same revision ratio to dividend history to calculate the yield (dividends included) of a stock. However, the detachment for the distribution of the UMG share also took place on September 21, 2021. It is the detachment date which is taken into account for the chosen distribution date. The value of this distribution, for its part, corresponds to the value of the share at the time of payment (in this case 24 euros at opening on September 23, 2021).
**Axa would like to point out that it has carried out several share buyback operations in recent years, the latest of which was in February 2023 for 1.1 billion euros.
***Orange tells us that with a TSR (for “Total Shareholder Return”) dividends reinvested (which does not correspond to our methodology), the profitability of the share would be 0.45% per year over the 5 last years.
Also see:
BFM Bourse ranking methodology:
The principle of our ranking of CAC 40 stocks is to position ourselves from the point of view of the small holder so that he can estimate as precisely as possible the return of each stock over five years. As a result, we have established a methodology, detailed point by point below, which aims to be as close as possible to the reality of the individual shareholder.
Course evolution:
In order to evaluate the evolution of prices, we compare the closing price of a share of year n (last day of trading of the calendar year) with that of year n-1 (last day of trading of the calendar year). Thus, for example, the annual change in the price of a share in 2020 corresponds to its change between the closing date on December 29, 2019 and that on December 31, 2020. The prices are retrieved from the Euronext site, which readjusts the history according to possible divisions of the nominal.
Mergers:
For major mergers of CAC 40 groups, in the event of a new share being issued to replace old shares (for example TechnipFMC shares replacing old Technip shares), we only include the most recent period in the classification. most recent since the issue of the new share. Only dividends detached after the merger takes effect (and therefore the listing of the new share) are also taken into account.
Gross yield with dividends:
The gross return with dividends as we calculate it corresponds, over a period of five years, to the amount that an individual shareholder would receive in total (any capital gains or losses, to which we add the dividends paid). Thus, over the period 2019-2023, this total return corresponds to the capital gain (or capital loss) realized for a share purchased at the closing price on 12/31/2018 and resold at the closing price on 12/29/ 2023, to which we add the dividends paid over the period.
Date dividends are taken into account:
In our ranking, it is the ex-dividend date that counts. Also, a detached dividend in 2020 (for the 2019 financial year) is taken into account in the calculation of the 2020 return (and not 2019). Here again, this involves only taking into account the point of view of a small holder who would have purchased a share at the start of the period concerned and then resold it at the end of this period.
If a secondment occurs in year n but is only paid in year n+1, it will be recorded in year n. Indeed, even if a shareholder resells his share at the start of year n+1 before the payment date, he will still receive this dividend if he held the share at the time of detachment in year n.
Impact of a division of the nominal value on the distribution of dividends or of a significant revision of the price history:
If the par value of a share has been divided, we take it into account to adjust the dividends that would have been received over the period. Thus, if a shareholder sees the nominal value of his share divided by three, we divide the dividends previously paid per share by three. Likewise, in the event of a significant readjustment/revision of historical prices, we adjust dividends received previously by the same ratio used by Euronext for historical prices.
Distribution of stock dividends:
Stock dividend distributions are taken into account when calculating yield. In order not to favor one form of distribution in kind of shares rather than another (i.e. whether payments in the group’s own shares or in external shares), and not to see certain effects accumulate in the long term which would distort the return on the share itself over the years, we assumed an immediate resale of the shares allocated at the time of their payment.
In other words, if a small holder receives a free share at a time “t”, we consider that he pockets the equivalent of the price at the opening of the session concerned. The amount recovered will be added to the dividends and capital gain (or capital loss) received over the period. For reasons of simplification, we consider this payment in shares to be fully received by the shareholder. Also, if the fact of holding ten shares allows you to collect an eleventh as a share dividend, we consider that the shareholder recovers in cash 1/10 of a share (at the opening price on the date of payment).
Five-year annual dividend yield:
We look at the dividends paid (cash and stock) for a share of each company over the past five years, and relate it here to the stock’s purchase value five years ago. In other words, this is the annual dividend yield for an individual who purchased a stock five years ago.
Jean-Louis Dell’Oro – ©2024 BFM Bourse