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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?

Today, let’s look backwards in time to 2010, and take a look at what happened to investors who asked that very question about Boston Properties Inc (NYSE: BXP), by taking a look at the investment outcome over a ten year holding period.

Start date: 11/26/2010


End date: 11/24/2020
Start price/share: $84.33
End price/share: $104.43
Starting shares: 118.58
Ending shares: 162.95
Dividends reinvested/share: $36.67
Total return: 70.17%
Average annual return: 5.46%
Starting investment: $10,000.00
Ending investment: $17,019.27

As shown above, the ten year investment result worked out well, with an annualized rate of return of 5.46%. This would have turned a $10K investment made 10 years ago into $17,019.27 today (as of 11/24/2020). On a total return basis, that’s a result of 70.17% (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 $36.67/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 3.75%. 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 $84.33/share purchase price. This works out to a yield on cost of 4.45%.

Another great investment quote to think about:
“All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” — Peter Lynch