“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.
| Start date: | 03/28/2012 |
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| End date: | 03/25/2022 | ||||
| Start price/share: | $58.44 | ||||
| End price/share: | $66.24 | ||||
| Starting shares: | 171.12 | ||||
| Ending shares: | 238.29 | ||||
| Dividends reinvested/share: | $14.11 | ||||
| Total return: | 57.84% | ||||
| Average annual return: | 4.67% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,782.21 | ||||
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
