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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

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into BorgWarner Inc (NYSE: BWA)? Today, we examine the outcome of a decade-long investment into the stock back in 2011.

Start date: 08/25/2011


End date: 08/24/2021
Start price/share: $33.61
End price/share: $43.39
Starting shares: 297.53
Ending shares: 332.75
Dividends reinvested/share: $4.78
Total return: 44.38%
Average annual return: 3.74%
Starting investment: $10,000.00
Ending investment: $14,439.42

As shown above, the decade-long investment result worked out as follows, with an annualized rate of return of 3.74%. This would have turned a $10K investment made 10 years ago into $14,439.42 today (as of 08/24/2021). On a total return basis, that’s a result of 44.38% (something to think about: how might BWA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that BorgWarner Inc paid investors a total of $4.78/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 .68/share, we calculate that BWA has a current yield of approximately 1.57%. 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 $33.61/share purchase price. This works out to a yield on cost of 4.67%.

Here’s one more great investment quote before you go:
“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch