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“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 Regions Financial Corp (NYSE: RF)? Today, we examine the outcome of a two-decade investment into the stock back in 2000.

Start date: 09/11/2000


End date: 09/08/2020
Start price/share: $19.84
End price/share: $11.37
Starting shares: 504.03
Ending shares: 945.19
Dividends reinvested/share: $13.01
Total return: 7.47%
Average annual return: 0.36%
Starting investment: $10,000.00
Ending investment: $10,745.38

The above analysis shows the two-decade investment result worked out as follows, with an annualized rate of return of 0.36%. This would have turned a $10K investment made 20 years ago into $10,745.38 today (as of 09/08/2020). On a total return basis, that’s a result of 7.47% (something to think about: how might RF shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Regions Financial Corp paid investors a total of $13.01/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 .62/share, we calculate that RF has a current yield of approximately 5.45%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .62 against the original $19.84/share purchase price. This works out to a yield on cost of 27.47%.

Another great investment quote to think about:
“Never is there a better time to buy a stock than when a basically sound company, for whatever reason, temporarily falls out of favor with the investment community.” — Geraldine Weiss