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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Juniper Networks Inc (NYSE: JNPR)? Today, we examine the outcome of a twenty year investment into the stock back in 2000.

Start date: 10/20/2000


End date: 10/19/2020
Start price/share: $232.00
End price/share: $22.07
Starting shares: 43.10
Ending shares: 49.42
Dividends reinvested/share: $3.48
Total return: -89.09%
Average annual return: -10.48%
Starting investment: $10,000.00
Ending investment: $1,091.13

As shown above, the twenty year investment result worked out poorly, with an annualized rate of return of -10.48%. This would have turned a $10K investment made 20 years ago into $1,091.13 today (as of 10/19/2020). On a total return basis, that’s a result of -89.09% (something to think about: how might JNPR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Juniper Networks Inc paid investors a total of $3.48/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 .8/share, we calculate that JNPR has a current yield of approximately 3.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $232.00/share purchase price. This works out to a yield on cost of 1.56%.

More investment wisdom to ponder:
“I make no attempt to forecast the market; my efforts are devoted to finding undervalued securities.” — Warren Buffett