Photo credit:

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into BorgWarner Inc (NYSE: BWA)? Today, we examine the outcome of a ten year investment into the stock back in 2011.

Start date: 02/02/2011


End date: 02/01/2021
Start price/share: $32.87
End price/share: $42.08
Starting shares: 304.23
Ending shares: 337.84
Dividends reinvested/share: $4.44
Total return: 42.16%
Average annual return: 3.58%
Starting investment: $10,000.00
Ending investment: $14,218.14

As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 3.58%. This would have turned a $10K investment made 10 years ago into $14,218.14 today (as of 02/01/2021). On a total return basis, that’s a result of 42.16% (something to think about: how might BWA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that BorgWarner Inc paid investors a total of $4.44/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 .68/share, we calculate that BWA has a current yield of approximately 1.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .68 against the original $32.87/share purchase price. This works out to a yield on cost of 4.93%.

One more investment quote to leave you with:
“Invest for the long haul. Don’t get too greedy and don’t get too scared.” — Shelby Davis