“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year 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 five year investment into the stock back in 2017.
| Start date: | 04/26/2017 |
|
|||
| End date: | 04/25/2022 | ||||
| Start price/share: | $127.35 | ||||
| End price/share: | $125.82 | ||||
| Starting shares: | 78.52 | ||||
| Ending shares: | 92.42 | ||||
| Dividends reinvested/share: | $18.45 | ||||
| Total return: | 16.28% | ||||
| Average annual return: | 3.06% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,626.55 | ||||
As shown above, the five year investment result worked out as follows, with an annualized rate of return of 3.06%. This would have turned a $10K investment made 5 years ago into $11,626.55 today (as of 04/25/2022). On a total return basis, that’s a result of 16.28% (something to think about: how might BXP shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Boston Properties Inc paid investors a total of $18.45/share in dividends over the 5 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 3.12%. 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 $127.35/share purchase price. This works out to a yield on cost of 2.45%.
One more piece of investment wisdom to leave you with:
“Never test the depth of a river with both feet.” — Warren Buffett
