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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a decade-long holding period for an investor who was considering Digital Realty Trust Inc (NYSE: DLR) back in 2011, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 07/11/2011
$10,000

07/11/2011
$37,497

07/08/2021
End date: 07/08/2021
Start price/share: $62.59
End price/share: $154.58
Starting shares: 159.77
Ending shares: 242.57
Dividends reinvested/share: $36.52
Total return: 274.97%
Average annual return: 14.13%
Starting investment: $10,000.00
Ending investment: $37,497.14

The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 14.13%. This would have turned a $10K investment made 10 years ago into $37,497.14 today (as of 07/08/2021). On a total return basis, that’s a result of 274.97% (something to think about: how might DLR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Digital Realty Trust Inc paid investors a total of $36.52/share in dividends over the 10 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 4.64/share, we calculate that DLR has a current yield of approximately 3.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.64 against the original $62.59/share purchase price. This works out to a yield on cost of 4.79%.

One more piece of investment wisdom to leave you with:
“Don’t wait for the perfect time, you will wait forever. Always take advantage of the time you’re given and make it perfect.” — Daymond John