“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 Boston Properties Inc (NYSE: BXP)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 04/11/2012 |
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| End date: | 04/08/2022 | ||||
| Start price/share: | $100.45 | ||||
| End price/share: | $122.70 | ||||
| Starting shares: | 99.55 | ||||
| Ending shares: | 139.70 | ||||
| Dividends reinvested/share: | $39.45 | ||||
| Total return: | 71.41% | ||||
| Average annual return: | 5.54% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,143.79 | ||||
As shown above, the decade-long investment result worked out well, with an annualized rate of return of 5.54%. This would have turned a $10K investment made 10 years ago into $17,143.79 today (as of 04/08/2022). On a total return basis, that’s a result of 71.41% (something to think about: how might BXP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Boston Properties Inc paid investors a total of $39.45/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 3.92/share, we calculate that BXP has a current yield of approximately 3.19%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.92 against the original $100.45/share purchase price. This works out to a yield on cost of 3.18%.
Here’s one more great investment quote before you go:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett
