“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a ten year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Boeing Co. (NYSE: BA) back in 2009, holding through to today.
| Start date: | 11/18/2009 |
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| End date: | 11/15/2019 | ||||
| Start price/share: | $52.02 | ||||
| End price/share: | $371.68 | ||||
| Starting shares: | 192.23 | ||||
| Ending shares: | 245.59 | ||||
| Dividends reinvested/share: | $38.72 | ||||
| Total return: | 812.81% | ||||
| Average annual return: | 24.76% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $91,304.13 | ||||
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 24.76%. This would have turned a $10K investment made 10 years ago into $91,304.13 today (as of 11/15/2019). On a total return basis, that’s a result of 812.81% (something to think about: how might BA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Dividends are always an important investment factor to consider, and Boeing Co. has paid $38.72/share in dividends to shareholders over the past 10 years we looked at above. Many an investor will only invest in stocks that pay dividends, so this component of total return is always an important consideration. Automated reinvestment of dividends into additional shares of stock can be a great way for an investor to compound their returns. The above calculations are done with the assuption that dividends received over time are reinvested (the calcuations use the closing price on ex-date).
Based upon the most recent annualized dividend rate of 8.22/share, we calculate that BA has a current yield of approximately 2.21%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 8.22 against the original $52.02/share purchase price. This works out to a yield on cost of 4.25%.
Here’s one more great investment quote before you go:
“If I’ve learned one thing in this life it’s this: even if you lose, don’t lose the lesson.” — Daymond John
