It’s a constant argument, whether from others or within your own mind. Should you invest in those big growth stocks everyone is talking about? After all, you’ve heard that some people have made millions overnight. Or should you stay safe and invest in blue-chip companies? It’ll take a lot longer, but you should reach that $1 million mark eventually…should you not?
Today, we’re going to solve this debate by looking to the past. I’m going to show investors whether, if you had the same amount of cash invested over the last 20 years, it would have been possible to make $1 million from growth stocks or a blue-chip company. So let’s head right in.
The growth stock
Arguably, one of the biggest growth stocks of the last 20 years was BlackBerry (TSX:BB) in Canada. Now, ignore how the stock is doing today, will you? After all, the BlackBerry smartphone was used the world over for decades before the company started its new move towards cybersecurity.
From January 2000 when the Blackberry was hailed as the most popular mobile email device of professionals – one year after its launch – to January 2020, when its impending retirement was announced, investors enjoyed a wild ride. When the company hit all-time highs, some investors became rich overnight. BlackBerry stock started the millennium at $15.83 per share, surging to all-time highs of $137 per share in May 2008, adjusted for stock splits.
Now, let’s say you dumped $85,000 into BlackBerry stock back in January 2000. That would have brought in 5,370 shares at the time. Then, those shares surged to $137 and woohoo! You sold at all-time highs!
Even that wouldn’t get you to $1 million. Instead, your shares would have been worth $735,690. So you hold out, hoping your investment will make its way to $1 million. Well, bad news. The shares have only dropped since then. In fact, by January 2020, your shares are now down 31%, worth just $47,417.
The dividend stock
Now let’s look at the same time period and the same amount of cash and see if it was possible to reach $1 million with an investment in a stable blue-chip stock. Canadian Imperial Bank of Commerce (TSX:CM) is a great choice, as it’s one of the Big Six Banks investors could look to.
Now, investors can add a dividend yield to their portfolio from this stock. Shares started out the millennium at about $19 per share, then hit $54 by January 2020 (both adjusted for the stock split). In that time, investors started out with a dividend of $0.60 per year, which then grew to $2.88 per share (again adjusted for the split).
After all, BlackBerry stock grew 765% from 2000 to all-time highs. CIBC stock in 20 years grew 658% by comparison. However, those dividends may make a difference, as you can see below.
| Year | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Year End Shares Owned | Year End Stock Price | New Balance |
| 1 | 4474 | C$0.60 | C$2,686.19 | C$87,724.19 | 4603.28 | C$21.03 | C$96,785.83 |
| 2 | 4603.28 | C$0.65 | C$2,989.34 | C$99,809.97 | 4733.26 | C$23.27 | C$110,127.34 |
| 3 | 4733.26 | C$0.70 | C$3,324.56 | C$113,489.72 | 4863.85 | C$25.75 | C$125,229.30 |
| 4 | 4863.85 | C$0.76 | C$3,695.06 | C$128,965.44 | 4994.98 | C$28.49 | C$142,314.88 |
| 5 | 4994.98 | C$0.82 | C$4,104.32 | C$146,463.81 | 5126.58 | C$31.53 | C$161,634.57 |
| 6 | 5126.58 | C$0.89 | C$4,556.19 | C$166,239.15 | 5258.55 | C$34.89 | C$183,469.39 |
| 7 | 5258.55 | C$0.96 | C$5,054.83 | C$188,576.69 | 5390.83 | C$38.61 | C$208,134.53 |
| 8 | 5390.83 | C$1.04 | C$5,604.84 | C$213,796.22 | 5523.35 | C$42.72 | C$235,983.36 |
| 9 | 5523.35 | C$1.12 | C$6,211.22 | C$242,256.16 | 5656.02 | C$47.28 | C$267,411.98 |
| 10 | 5656.02 | C$1.22 | C$6,879.42 | C$274,358.06 | 5788.79 | C$52.32 | C$302,864.18 |
| 11 | 5788.79 | C$1.32 | C$7,615.44 | C$310,551.73 | 5921.57 | C$57.90 | C$342,837.05 |
| 12 | 5921.57 | C$1.42 | C$8,425.80 | C$351,340.82 | 6054.3 | C$64.07 | C$387,887.25 |
| 13 | 6054.3 | C$1.54 | C$9,317.61 | C$397,289.13 | 6186.91 | C$70.90 | C$438,637.91 |
| 14 | 6186.91 | C$1.66 | C$10,298.68 | C$449,027.62 | 6319.34 | C$78.46 | C$495,786.42 |
| 15 | 6319.34 | C$1.80 | C$11,377.47 | C$507,262.18 | 6451.52 | C$86.82 | C$560,113.01 |
| 16 | 6451.52 | C$1.95 | C$12,563.28 | C$572,782.36 | 6583.39 | C$96.07 | C$632,490.40 |
| 17 | 6583.39 | C$2.11 | C$13,866.19 | C$646,471.01 | 6714.89 | C$106.32 | C$713,894.49 |
| 18 | 6714.89 | C$2.28 | C$15,297.25 | C$729,315.10 | 6845.97 | C$117.65 | C$805,416.25 |
| 19 | 6845.97 | C$2.46 | C$16,868.47 | C$822,417.67 | 6976.56 | C$130.19 | C$908,275.04 |
| 20 | 6976.56 | C$2.67 | C$18,592.97 | C$927,011.22 | 7106.61 | C$144.07 | C$1,023,833.34 |
Bottom line
There you have it. If you were to invest the same cash into CIBC stock, after 20 years your shares would be worth over $1 million with dividends reinvested! Furthermore, your BlackBerry stock would be worth less than when you started, and you still wouldn’t have reached $1 million even by selling at all-time highs.
So honestly, consider this the end to that debate. Stick with a blue-chip stock for long-term income that’s more stable, and frankly, more likely.
