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“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 Realty Income Corp (NYSE: O)? Today, we examine the outcome of a ten year investment into the stock back in 2009.

Start date: 08/03/2009


End date: 08/01/2019
Start price/share: $23.91
End price/share: $69.67
Starting shares: 418.24
Ending shares: 671.87
Dividends reinvested/share: $21.60
Total return: 368.09%
Average annual return: 16.69%
Starting investment: $10,000.00
Ending investment: $46,809.76

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 16.69%. This would have turned a $10K investment made 10 years ago into $46,809.76 today (as of 08/01/2019). On a total return basis, that’s a result of 368.09% (something to think about: how might O shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Realty Income Corp paid investors a total of $21.60/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 2.718/share, we calculate that O has a current yield of approximately 3.90%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.718 against the original $23.91/share purchase price. This works out to a yield on cost of 16.31%.

One more piece of investment wisdom to leave you with:
“In the long run, we are all dead.” — John Maynard Keynes