Diversifying companies delivered 53% higher annual shareholder returns during and after COVID

by | Mar 30, 2024

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  • Study from Stryber of 738 listed businesses in Europe showed that companies which diversified their revenue streams deliver 53% higher annualised returns for shareholders
  • Firms that had already added new revenue streams prior to the turbulent COVID years delivered greater returns post-COVID

Companies which diversify their revenue streams offer greater returns to their shareholders than those who don’t. A new report from Stryber looked at the increase in stock price combined with dividend payouts of 738 listed companies in Europe between 2010-2023, and compared the performance of those with multiple revenue streams and those without.

Stryber, a leading corporate venture builder and strategic growth consultancy, analysed sales and total shareholder return data for its newly released report, “The Diversification Dividend”. The findings offered a stark warning: a lack of diversification can be disastrous for shareholder value.

While diversification always provides higher shareholder returns, its importance was underscored during and after COVID. In the preceding period of calm between 2010-2019, businesses that had consciously added revenue streams during this period delivered 16% superior annual median total shareholder returns. In the turbulent years of 2020-2023, that number shot up to 53%.


Interestingly, the research reveals that the ability of an organisation to diversify is more impactful than the absolute level of diversification. The firms that focused on their core business gradually experienced a 6% lower annual total shareholder return, which significantly dropped to -14.2% compared to the median annual total shareholder return over 2020-2023. In contrast, the businesses that continuously diversified achieved an impressive 32.8% advantage.

The findings are published in the latest report from Stryber, entitled “The Diversification Dividend” – which continues research first conducted in 2021, in its “The Power of Diversification” report.

Key findings:

  • Companies adding new revenue streams over time outperform peers that stick to their core business with better stock market performance.
  • During the COVID years and beyond (2020-2023), companies that had already added one or more revenue streams during the 2010-2019 period outperformed those that hadn’t. The diversification advantage was more than 3-fold greater during and after COVID than in the ten years of economic upswing preceding the pandemic.
  • 70% of companies are unable to create new revenue streams outside their existing core businesses due to active inertia and innovator’s dilemma.

Jan Sedlacek, Co-founder and Managing Partner at Stryber, said: “Our research demonstrates that diversification is not only a strategy for growth but also a hedge against market volatility. Companies that focus solely on their core business may see short-term efficiency gains, but they risk long-term value destruction. On the other hand, if they have the capability to add new revenue streams, whether through M&A or venture building, they are better positioned to weather economic uncertainty and deliver long-term value to shareholders”

A prime example of successful diversification is Ashtead Group, a British industrial equipment rental company. Initially focused solely on the construction industry, Ashtead Group strategically diversified into non-construction end markets to mitigate the cyclical risks of its original core business. This diversification included a significant push into the rental of commercial floor-cleaning equipment for venues such as airports, hotels, and warehouses, and a larger inventory of speciality businesses like heating, ventilation, and temporary power solutions, targeting growth in these less penetrated segments. As a result, non-construction markets now represent 60% of Ashtead Group’s revenue, with specialty rentals comprising 30% of revenues, a significant increase from 13% in 2008. This successful migration is reflected into the annualised total shareholder return of 24% in the 2020-2023 period.  

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