“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 SL Green Realty Corp (NYSE: SLG)? Today, we examine the outcome of a two-decade investment into the stock back in 1999.
| Start date: | 11/08/1999 |
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| End date: | 11/06/2019 | ||||
| Start price/share: | $20.31 | ||||
| End price/share: | $84.63 | ||||
| Starting shares: | 492.31 | ||||
| Ending shares: | 941.91 | ||||
| Dividends reinvested/share: | $40.24 | ||||
| Total return: | 697.14% | ||||
| Average annual return: | 10.93% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $79,680.22 | ||||
The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 10.93%. This would have turned a $10K investment made 20 years ago into $79,680.22 today (as of 11/06/2019). On a total return basis, that’s a result of 697.14% (something to think about: how might SLG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that SL Green Realty Corp paid investors a total of $40.24/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 3.4/share, we calculate that SLG has a current yield of approximately 4.02%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.4 against the original $20.31/share purchase price. This works out to a yield on cost of 19.79%.
One more investment quote to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
