“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 ten year holding period for an investor who was considering DISH Network Corp (NASD: DISH) back in 2011, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 08/24/2011 |
|
|||
| End date: | 08/23/2021 | ||||
| Start price/share: | $22.24 | ||||
| End price/share: | $43.19 | ||||
| Starting shares: | 449.64 | ||||
| Ending shares: | 500.09 | ||||
| Dividends reinvested/share: | $3.00 | ||||
| Total return: | 115.99% | ||||
| Average annual return: | 8.00% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $21,598.36 | ||||
The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 8.00%. This would have turned a $10K investment made 10 years ago into $21,598.36 today (as of 08/23/2021). On a total return basis, that’s a result of 115.99% (something to think about: how might DISH shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that DISH Network Corp paid investors a total of $3.00/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 /share, we calculate that DISH has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of against the original $22.24/share purchase price. This works out to a yield on cost of 0.00%.
Here’s one more great investment quote before you go:
“As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.” — Benjamin Graham
