“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Kimco Realty Corp (NYSE: KIM)? Today, we examine the outcome of a five year investment into the stock back in 2014.
| Start date: | 11/07/2014 |
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| End date: | 11/06/2019 | ||||
| Start price/share: | $24.79 | ||||
| End price/share: | $21.39 | ||||
| Starting shares: | 403.39 | ||||
| Ending shares: | 521.97 | ||||
| Dividends reinvested/share: | $5.30 | ||||
| Total return: | 11.65% | ||||
| Average annual return: | 2.23% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,165.85 | ||||
As shown above, the five year investment result worked out as follows, with an annualized rate of return of 2.23%. This would have turned a $10K investment made 5 years ago into $11,165.85 today (as of 11/06/2019). On a total return basis, that’s a result of 11.65% (something to think about: how might KIM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Kimco Realty Corp paid investors a total of $5.30/share in dividends over the 5 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 1.12/share, we calculate that KIM has a current yield of approximately 5.24%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.12 against the original $24.79/share purchase price. This works out to a yield on cost of 21.14%.
More investment wisdom to ponder:
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” — Warren Buffett
