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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: 10/10/2011


End date: 10/07/2021
Start price/share: $34.32
End price/share: $45.78
Starting shares: 291.38
Ending shares: 327.16
Dividends reinvested/share: $4.95
Total return: 49.78%
Average annual return: 4.12%
Starting investment: $10,000.00
Ending investment: $14,974.13

The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 4.12%. This would have turned a $10K investment made 10 years ago into $14,974.13 today (as of 10/07/2021). On a total return basis, that’s a result of 49.78% (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 $4.95/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 1.49%. 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 $34.32/share purchase price. This works out to a yield on cost of 4.34%.

One more investment quote to leave you with:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt