“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 Pentair PLC (NYSE: PNR)? Today, we examine the outcome of a five year investment into the stock back in 2017.
|Average annual return:||3.63%|
The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 3.63%. This would have turned a $10K investment made 5 years ago into $11,951.64 today (as of 05/23/2022). On a total return basis, that’s a result of 19.52% (something to think about: how might PNR shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Pentair PLC paid investors a total of $3.98/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 .84/share, we calculate that PNR has a current yield of approximately 1.71%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .84 against the original $44.72/share purchase price. This works out to a yield on cost of 3.82%.
One more piece of investment wisdom to leave you with:
“If I’ve learned one thing in this life it’s this: even if you lose, don’t lose the lesson.” — Daymond John