“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 Juniper Networks Inc (NYSE: JNPR)? Today, we examine the outcome of a twenty year investment into the stock back in 2002.
| Start date: | 01/25/2002 |
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| End date: | 01/24/2022 | ||||
| Start price/share: | $16.90 | ||||
| End price/share: | $32.29 | ||||
| Starting shares: | 591.72 | ||||
| Ending shares: | 705.11 | ||||
| Dividends reinvested/share: | $4.48 | ||||
| Total return: | 127.68% | ||||
| Average annual return: | 4.20% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $22,779.81 | ||||
As we can see, the twenty year investment result worked out as follows, with an annualized rate of return of 4.20%. This would have turned a $10K investment made 20 years ago into $22,779.81 today (as of 01/24/2022). On a total return basis, that’s a result of 127.68% (something to think about: how might JNPR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Juniper Networks Inc paid investors a total of $4.48/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 .8/share, we calculate that JNPR has a current yield of approximately 2.48%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $16.90/share purchase price. This works out to a yield on cost of 14.67%.
Another great investment quote to think about:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross
