Capital One stock has risen 3,620% since 1995. But what about over the last five years?
Capital One Financial (COF -0.62%) stock has proven an exceptional investment over the long term. Since 1995, shares have risen in value by more than 3,600%. The S&P 500, for comparison, rose in value by about half that amount over that time period.
But what about the past five years? Are Capital One shares still outpacing the market?
Did Capital One stock beat the market over the last five years?
On May 7, 2019, Capital One stock closed at $91.60 per share. This week, the share price is around $140. When including dividends, the total return over the past five years has been roughly 70%. That means a $250 investment would now be worth about $425. The S&P 500, meanwhile, has delivered a total return of 95%, turning a $250 investment into $488.
Why has Capital One stock lagged the market? It’s been a difficult economic environment for most financial stocks. The Vanguard Financials ETF, for instance, has returned just 63% over the past five years. The pandemic, inflation, interest rates, and economic uncertainty all played a part.
It’s important to note, however, that Capital One shares have lagged the market over many five-year periods. But over the very long term, they’ve outpaced the market. That’s because many of the stock’s biggest moves have come over short periods of time. Over the past six months, for example, shares have spiked in value by about 35%. If you trade in and out of the stock, there’s a good chance you missed the biggest upward moves.
There are many stocks like Capital One, which lag the market for years at a time, accruing most of their value over short periods. It’s a great reminder that buying and holding high-quality businesses for years — if not decades — at a time is the most reliable way to accumulate wealth.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
