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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 Boston Properties Inc (NYSE: BXP)? Today, we examine the outcome of a five year investment into the stock back in 2016.

Start date: 01/14/2016


End date: 01/13/2021
Start price/share: $119.87
End price/share: $92.09
Starting shares: 83.42
Ending shares: 96.62
Dividends reinvested/share: $17.00
Total return: -11.02%
Average annual return: -2.31%
Starting investment: $10,000.00
Ending investment: $8,896.57

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -2.31%. This would have turned a $10K investment made 5 years ago into $8,896.57 today (as of 01/13/2021). On a total return basis, that’s a result of -11.02% (something to think about: how might BXP shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Boston Properties Inc paid investors a total of $17.00/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 3.92/share, we calculate that BXP has a current yield of approximately 4.26%. 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 $119.87/share purchase price. This works out to a yield on cost of 3.55%.

One more investment quote to leave you with:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman