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

Start date: 10/12/2015


End date: 10/09/2020
Start price/share: $35.83
End price/share: $35.47
Starting shares: 279.10
Ending shares: 329.44
Dividends reinvested/share: $6.44
Total return: 16.85%
Average annual return: 3.17%
Starting investment: $10,000.00
Ending investment: $11,687.73

The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 3.17%. This would have turned a $10K investment made 5 years ago into $11,687.73 today (as of 10/09/2020). On a total return basis, that’s a result of 16.85% (something to think about: how might UDR shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that UDR Inc paid investors a total of $6.44/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 1.44/share, we calculate that UDR has a current yield of approximately 4.06%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.44 against the original $35.83/share purchase price. This works out to a yield on cost of 11.33%.

One more investment quote to leave you with:
“Those who do not remember the past are condemned to repeat it.” — George Santayana