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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 Prologis Inc (NYSE: PLD)? Today, we examine the outcome of a twenty year investment into the stock back in 2000.

Start date: 11/03/2000


End date: 11/02/2020
Start price/share: $23.25
End price/share: $101.87
Starting shares: 430.11
Ending shares: 942.46
Dividends reinvested/share: $31.77
Total return: 860.08%
Average annual return: 11.97%
Starting investment: $10,000.00
Ending investment: $96,066.43

As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 11.97%. This would have turned a $10K investment made 20 years ago into $96,066.43 today (as of 11/02/2020). On a total return basis, that’s a result of 860.08% (something to think about: how might PLD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Prologis Inc paid investors a total of $31.77/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 2.32/share, we calculate that PLD has a current yield of approximately 2.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.32 against the original $23.25/share purchase price. This works out to a yield on cost of 9.81%.

Another great investment quote to think about:
“The greater the passive income you can build, the freer you will become.” — Todd Fleming