“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a five year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Blackrock Inc (NYSE: BLK) back in 2016, holding through to today.
|Average annual return:||23.14%|
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 23.14%. This would have turned a $10K investment made 5 years ago into $28,281.37 today (as of 06/17/2021). On a total return basis, that’s a result of 182.77% (something to think about: how might BLK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Always an important consideration with a dividend-paying company is: should we reinvest our dividends?Over the past 5 years, Blackrock Inc has paid $62.58/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock (for the above calculations, the reinvestment is performed using closing price on ex-div date for that dividend).
Based upon the most recent annualized dividend rate of 16.52/share, we calculate that BLK has a current yield of approximately 1.90%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 16.52 against the original $348.43/share purchase price. This works out to a yield on cost of 0.55%.
Another great investment quote to think about:
“Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.” — Seth Klarman