“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Corning Inc (NYSE: GLW)? Today, we examine the outcome of a two-decade investment into the stock back in 1999.
|Average annual return:||2.79%|
As shown above, the two-decade investment result worked out as follows, with an annualized rate of return of 2.79%. This would have turned a $10K investment made 20 years ago into $17,341.35 today (as of 09/13/2019). On a total return basis, that’s a result of 73.54% (something to think about: how might GLW shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Corning Inc paid investors a total of $5.41/share in dividends over the 20 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 .8/share, we calculate that GLW has a current yield of approximately 2.65%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $22.35/share purchase price. This works out to a yield on cost of 11.86%.
One more piece of investment wisdom to leave you with:
“When I was young I thought that money was the most important thing in life; now that I am old I know that it is.” — Oscar Wilde