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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Royal Caribbean Group (NYSE: RCL)? Today, we examine the outcome of a twenty year investment into the stock back in 2002.

Start date: 06/03/2002


End date: 06/01/2022
Start price/share: $22.50
End price/share: $55.57
Starting shares: 444.44
Ending shares: 594.24
Dividends reinvested/share: $17.68
Total return: 230.22%
Average annual return: 6.15%
Starting investment: $10,000.00
Ending investment: $33,007.53

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 6.15%. This would have turned a $10K investment made 20 years ago into $33,007.53 today (as of 06/01/2022). On a total return basis, that’s a result of 230.22% (something to think about: how might RCL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Royal Caribbean Group paid investors a total of $17.68/share in dividends over the 20 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 3.12/share, we calculate that RCL has a current yield of approximately 5.61%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.12 against the original $22.50/share purchase price. This works out to a yield on cost of 24.93%.

More investment wisdom to ponder:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil