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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 KeyCorp (NYSE: KEY)? Today, we examine the outcome of a twenty year investment into the stock back in 2001.

Start date: 08/09/2001


End date: 08/06/2021
Start price/share: $27.79
End price/share: $20.33
Starting shares: 359.84
Ending shares: 676.88
Dividends reinvested/share: $13.65
Total return: 37.61%
Average annual return: 1.61%
Starting investment: $10,000.00
Ending investment: $13,764.71

As shown above, the twenty year investment result worked out as follows, with an annualized rate of return of 1.61%. This would have turned a $10K investment made 20 years ago into $13,764.71 today (as of 08/06/2021). On a total return basis, that’s a result of 37.61% (something to think about: how might KEY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that KeyCorp paid investors a total of $13.65/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 .74/share, we calculate that KEY has a current yield of approximately 3.64%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .74 against the original $27.79/share purchase price. This works out to a yield on cost of 13.10%.

One more piece of investment wisdom to leave you with:
“The function of economic forecasting is to make astrology look respectable.” — John Galbraith