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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— 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 Regions Financial Corp (NYSE: RF)? Today, we examine the outcome of a twenty year investment into the stock back in 2001.

Start date: 02/09/2001


End date: 02/08/2021
Start price/share: $24.25
End price/share: $19.54
Starting shares: 412.37
Ending shares: 764.12
Dividends reinvested/share: $12.73
Total return: 49.31%
Average annual return: 2.02%
Starting investment: $10,000.00
Ending investment: $14,921.12

As shown above, the twenty year investment result worked out as follows, with an annualized rate of return of 2.02%. This would have turned a $10K investment made 20 years ago into $14,921.12 today (as of 02/08/2021). On a total return basis, that’s a result of 49.31% (something to think about: how might RF shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Regions Financial Corp paid investors a total of $12.73/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 .62/share, we calculate that RF has a current yield of approximately 3.17%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .62 against the original $24.25/share purchase price. This works out to a yield on cost of 13.07%.

One more piece of investment wisdom to leave you with:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch