In 1984, UK investors put £1,000 into British Telecom shares; 20 years later, reinvested dividends lifted the stake to £5,710

When the UK government sold British Telecom shares to the public in 1984, investors had the chance to own a stake in the telecommunications company. Two decades later, the value of that investment depended in part on what they did with the dividends they received.

A Fidelity Investments analysis reported by The Guardian found that £1,000 invested in BT shares in 1984 was worth £2,175 in 2004. The value rose to £5,710 for investors who reinvested their dividends to buy more shares, rather than taking the payouts as cash.

What exactly happened?

The UK government began selling BT shares to the public on November 30, 1984, giving individual investors an opportunity to buy a stake in the telecommunications company.


More than two million individual investors bought shares in the telecommunications company on that date, according to The Guardian.

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The sale was part of a wider shift towards transferring government-owned businesses into private ownership. For many individuals, the offer provided an opportunity to become shareholders in a major British company.

Twenty years later, the performance of those shares offered a way to compare the returns earned by investors who retained their original holdings with those who reinvested the income they received/

How much did a £1,000 investment grow by 2004?

BT shares worth £1,000 at the time of the 1984 sale had a value of around £2,175 in 2004.

That represented an increase of 117.5% over the 20-year period, excluding the additional effect of reinvesting dividends.

For investors who had used their dividend payments to purchase more BT shares, the total holding was worth £5,710. This figure included the original £1,000 investment.

The difference between the two outcomes showed how the use of dividend income could change the overall value of a long-term shareholding.

Did other privatised companies deliver better returns?

BT was not the only company examined in the 2004 report. Investors who bought British Gas shares on December 5, 1986, had seen the value of those shares increase by 477% by the time of the analysis. When dividends were reinvested, the increase reached 1,253%, according to The Guardian.

Water company Severn Trent also delivered substantial returns. Its shares had increased by 263.5% since listing, while the increase reached 842% with dividends reinvested.