“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Blackrock Inc (NYSE: BLK)? Today, we examine the outcome of a decade-long investment into the stock back in 2010.
| Start date: | 07/13/2010 |
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| End date: | 07/10/2020 | ||||
| Start price/share: | $156.90 | ||||
| End price/share: | $554.08 | ||||
| Starting shares: | 63.73 | ||||
| Ending shares: | 83.24 | ||||
| Dividends reinvested/share: | $88.30 | ||||
| Total return: | 361.24% | ||||
| Average annual return: | 16.52% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $46,132.26 | ||||
The above analysis shows the decade-long investment result worked out exceptionally well, with an annualized rate of return of 16.52%. This would have turned a $10K investment made 10 years ago into $46,132.26 today (as of 07/10/2020). On a total return basis, that’s a result of 361.24% (something to think about: how might BLK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Many investors out there refuse to own any stock that lacks a dividend; in the case of Blackrock Inc, investors have received $88.30/share in dividends these past 10 years examined in the exercise above. This means total return was driven not just by share price, but also by the dividends received (and what the investor did with those dividends). For this exercise, what we’ve done with the dividends is to assume they are reinvestted — i.e. used to purchase additional shares (the calculations use closing price on ex-date).
Based upon the most recent annualized dividend rate of 14.52/share, we calculate that BLK has a current yield of approximately 2.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 14.52 against the original $156.90/share purchase price. This works out to a yield on cost of 1.67%.
Another great investment quote to think about:
“The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.” — Benjamin Graham
