“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Danaher Corp (NYSE: DHR)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 10/17/2011 |
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| End date: | 10/14/2021 | ||||
| Start price/share: | $33.34 | ||||
| End price/share: | $300.43 | ||||
| Starting shares: | 299.94 | ||||
| Ending shares: | 313.96 | ||||
| Dividends reinvested/share: | $4.61 | ||||
| Total return: | 843.24% | ||||
| Average annual return: | 25.16% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $94,331.24 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 25.16%. This would have turned a $10K investment made 10 years ago into $94,331.24 today (as of 10/14/2021). On a total return basis, that’s a result of 843.24% (something to think about: how might DHR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Danaher Corp paid investors a total of $4.61/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 .84/share, we calculate that DHR has a current yield of approximately 0.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .84 against the original $33.34/share purchase price. This works out to a yield on cost of 0.84%.
One more investment quote to leave you with:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett
