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

Start date: 07/13/2001


End date: 07/12/2021
Start price/share: $32.00
End price/share: $26.71
Starting shares: 312.50
Ending shares: 569.64
Dividends reinvested/share: $13.34
Total return: 52.15%
Average annual return: 2.12%
Starting investment: $10,000.00
Ending investment: $15,216.54

The above analysis shows the twenty year investment result worked out as follows, with an annualized rate of return of 2.12%. This would have turned a $10K investment made 20 years ago into $15,216.54 today (as of 07/12/2021). On a total return basis, that’s a result of 52.15% (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 $13.34/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 .68/share, we calculate that IVZ has a current yield of approximately 2.55%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .68 against the original $32.00/share purchase price. This works out to a yield on cost of 7.97%.

One more piece of investment wisdom to leave you with:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross