“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Broadridge Financial Solutions (NYSE: BR)? Today, we examine the outcome of a ten year investment into the stock back in 2009.
| Start date: | 04/24/2009 |
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| End date: | 04/23/2019 | ||||
| Start price/share: | $19.09 | ||||
| End price/share: | $115.07 | ||||
| Starting shares: | 523.83 | ||||
| Ending shares: | 659.88 | ||||
| Dividends reinvested/share: | $9.94 | ||||
| Total return: | 659.33% | ||||
| Average annual return: | 22.47% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $75,951.85 | ||||
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 22.47%. This would have turned a $10K investment made 10 years ago into $75,951.85 today (as of 04/23/2019). On a total return basis, that’s a result of 659.33% (something to think about: how might BR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Broadridge Financial Solutions paid investors a total of $9.94/share in dividends over the 10 holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 1.94/share, we calculate that BR has a current yield of approximately 1.69%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.94 against the original $19.09/share purchase price. This works out to a yield on cost of 8.85%.
Another great investment quote to think about:
“Be fearful when others are greedy; be greedy when others are fearful.” — Warren Buffett
