“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 Newell Brands Inc (NASD: NWL)? Today, we examine the outcome of a twenty year investment into the stock back in 2001.
| Start date: | 03/26/2001 |
|
|||
| End date: | 03/25/2021 | ||||
| Start price/share: | $27.07 | ||||
| End price/share: | $25.87 | ||||
| Starting shares: | 369.41 | ||||
| Ending shares: | 680.26 | ||||
| Dividends reinvested/share: | $14.34 | ||||
| Total return: | 75.98% | ||||
| Average annual return: | 2.87% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,614.72 | ||||
As we can see, the twenty year investment result worked out as follows, with an annualized rate of return of 2.87%. This would have turned a $10K investment made 20 years ago into $17,614.72 today (as of 03/25/2021). On a total return basis, that’s a result of 75.98% (something to think about: how might NWL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Newell Brands Inc paid investors a total of $14.34/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 .92/share, we calculate that NWL has a current yield of approximately 3.56%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .92 against the original $27.07/share purchase price. This works out to a yield on cost of 13.15%.
One more piece of investment wisdom to leave you with:
“Money is better than poverty, if only for financial reasons.” — Woody Allen
