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“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 NextEra Energy Inc (NYSE: NEE)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 07/16/2015


End date: 07/15/2020
Start price/share: $104.43
End price/share: $259.00
Starting shares: 95.76
Ending shares: 109.45
Dividends reinvested/share: $21.19
Total return: 183.47%
Average annual return: 23.15%
Starting investment: $10,000.00
Ending investment: $28,341.31

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 23.15%. This would have turned a $10K investment made 5 years ago into $28,341.31 today (as of 07/15/2020). On a total return basis, that’s a result of 183.47% (something to think about: how might NEE shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that NextEra Energy Inc paid investors a total of $21.19/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 5.6/share, we calculate that NEE has a current yield of approximately 2.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.6 against the original $104.43/share purchase price. This works out to a yield on cost of 2.07%.

Another great investment quote to think about:
“Ensure management’s interests are aligned with shareholders.” — Sam Zell