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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 Invesco Ltd (NYSE: IVZ)? Today, we examine the outcome of a twenty year investment into the stock back in 2001.

Start date: 03/01/2001


End date: 02/26/2021
Start price/share: $36.02
End price/share: $22.42
Starting shares: 277.62
Ending shares: 506.35
Dividends reinvested/share: $13.36
Total return: 13.52%
Average annual return: 0.64%
Starting investment: $10,000.00
Ending investment: $11,361.29

The above analysis shows the twenty year investment result worked out as follows, with an annualized rate of return of 0.64%. This would have turned a $10K investment made 20 years ago into $11,361.29 today (as of 02/26/2021). On a total return basis, that’s a result of 13.52% (something to think about: how might IVZ shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Invesco Ltd paid investors a total of $13.36/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 IVZ has a current yield of approximately 2.77%. 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 $36.02/share purchase price. This works out to a yield on cost of 7.69%.

More investment wisdom to ponder:
“You can get in much more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” — Benjamin Graham