“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 Johnson Controls International plc (NYSE: JCI)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
|Average annual return:||4.67%|
The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 4.67%. This would have turned a $10K investment made 10 years ago into $15,782.21 today (as of 03/25/2022). On a total return basis, that’s a result of 57.84% (something to think about: how might JCI shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Johnson Controls International plc paid investors a total of $14.11/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 1.4/share, we calculate that JCI has a current yield of approximately 2.11%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.4 against the original $58.44/share purchase price. This works out to a yield on cost of 3.61%.
One more investment quote to leave you with:
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” — Benjamin Graham