“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 Expedia Group Inc (NASD: EXPE)? Today, we examine the outcome of a five year investment into the stock back in 2016.
| Start date: | 03/07/2016 |
|
|||
| End date: | 03/04/2021 | ||||
| Start price/share: | $105.39 | ||||
| End price/share: | $158.41 | ||||
| Starting shares: | 94.89 | ||||
| Ending shares: | 99.09 | ||||
| Dividends reinvested/share: | $5.06 | ||||
| Total return: | 56.96% | ||||
| Average annual return: | 9.45% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,698.71 | ||||
As shown above, the five year investment result worked out well, with an annualized rate of return of 9.45%. This would have turned a $10K investment made 5 years ago into $15,698.71 today (as of 03/04/2021). On a total return basis, that’s a result of 56.96% (something to think about: how might EXPE shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Expedia Group Inc paid investors a total of $5.06/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 1.36/share, we calculate that EXPE has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.36 against the original $105.39/share purchase price. This works out to a yield on cost of 0.00%.
One more investment quote to leave you with:
“Know what you own and why you own it.” — Peter Lynch
