“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 Juniper Networks Inc (NYSE: JNPR)? Today, we examine the outcome of a ten year investment into the stock back in 2009.
| Start date: | 08/17/2009 |
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| End date: | 08/14/2019 | ||||
| Start price/share: | $23.69 | ||||
| End price/share: | $24.22 | ||||
| Starting shares: | 422.12 | ||||
| Ending shares: | 464.33 | ||||
| Dividends reinvested/share: | $2.50 | ||||
| Total return: | 12.46% | ||||
| Average annual return: | 1.18% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,244.31 | ||||
As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 1.18%. This would have turned a $10K investment made 10 years ago into $11,244.31 today (as of 08/14/2019). On a total return basis, that’s a result of 12.46% (something to think about: how might JNPR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Juniper Networks Inc paid investors a total of $2.50/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 .76/share, we calculate that JNPR has a current yield of approximately 3.14%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .76 against the original $23.69/share purchase price. This works out to a yield on cost of 13.25%.
Here’s one more great investment quote before you go:
“It’s not how much money you make, but how much money you keep.” — Robert Kiyosaki
