“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 Sysco Corp (NYSE: SYY)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 04/02/2012 |
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| End date: | 03/31/2022 | ||||
| Start price/share: | $30.04 | ||||
| End price/share: | $81.65 | ||||
| Starting shares: | 332.89 | ||||
| Ending shares: | 443.55 | ||||
| Dividends reinvested/share: | $14.43 | ||||
| Total return: | 262.15% | ||||
| Average annual return: | 13.73% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $36,203.49 | ||||
As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 13.73%. This would have turned a $10K investment made 10 years ago into $36,203.49 today (as of 03/31/2022). On a total return basis, that’s a result of 262.15% (something to think about: how might SYY shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Sysco Corp paid investors a total of $14.43/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 1.88/share, we calculate that SYY has a current yield of approximately 2.30%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.88 against the original $30.04/share purchase price. This works out to a yield on cost of 7.66%.
More investment wisdom to ponder:
“Nearly every time I strayed from the herd, I’ve made a lot of money. Wandering away from the action is the way to find the new action.” — Jim Rogers
