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“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Boston Properties Inc (NYSE: BXP)? Today, we examine the outcome of a ten year investment into the stock back in 2010.

Start date: 08/25/2010


End date: 08/24/2020
Start price/share: $81.39
End price/share: $87.13
Starting shares: 122.87
Ending shares: 167.79
Dividends reinvested/share: $36.19
Total return: 46.19%
Average annual return: 3.87%
Starting investment: $10,000.00
Ending investment: $14,621.49

As we can see, the ten year investment result worked out as follows, with an annualized rate of return of 3.87%. This would have turned a $10K investment made 10 years ago into $14,621.49 today (as of 08/24/2020). On a total return basis, that’s a result of 46.19% (something to think about: how might BXP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Boston Properties Inc paid investors a total of $36.19/share in dividends over the 10 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 3.92/share, we calculate that BXP has a current yield of approximately 4.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.92 against the original $81.39/share purchase price. This works out to a yield on cost of 5.53%.

More investment wisdom to ponder:
“The function of economic forecasting is to make astrology look respectable.” — John Galbraith