“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 Genuine Parts Co. (NYSE: GPC)? Today, we examine the outcome of a ten year investment into the stock back in 2009.
| Start date: | 09/17/2009 |
|
|||
| End date: | 09/16/2019 | ||||
| Start price/share: | $36.94 | ||||
| End price/share: | $97.89 | ||||
| Starting shares: | 270.71 | ||||
| Ending shares: | 366.97 | ||||
| Dividends reinvested/share: | $23.23 | ||||
| Total return: | 259.22% | ||||
| Average annual return: | 13.64% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $35,930.59 | ||||
As shown above, the ten year investment result worked out quite well, with an annualized rate of return of 13.64%. This would have turned a $10K investment made 10 years ago into $35,930.59 today (as of 09/16/2019). On a total return basis, that’s a result of 259.22% (something to think about: how might GPC shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Genuine Parts Co. paid investors a total of $23.23/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 3.05/share, we calculate that GPC has a current yield of approximately 3.12%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.05 against the original $36.94/share purchase price. This works out to a yield on cost of 8.45%.
Another great investment quote to think about:
“Spend each day trying to be a little wiser than you were when you woke up.” — Charlie Munger
