“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 STERIS plc (NYSE: STE)? Today, we examine the outcome of a twenty year investment into the stock back in 2002.
|Average annual return:||14.43%|
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 14.43%. This would have turned a $10K investment made 20 years ago into $148,237.59 today (as of 07/01/2022). On a total return basis, that’s a result of 1,381.80% (something to think about: how might STE shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Beyond share price change, another component of STE’s total return these past 20 years has been the payment by STERIS plc of $16.74/share in dividends to shareholders. Automatic reinvestment of dividends can be a wonderful way to compound returns, and for the above calculations we presume that dividends are reinvested into additional shares of stock. (For the purpose of these calcuations, the closing price on ex-date is used).
Based upon the most recent annualized dividend rate of 1.72/share, we calculate that STE has a current yield of approximately 0.82%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.72 against the original $18.98/share purchase price. This works out to a yield on cost of 4.32%.
One more investment quote to leave you with:
“If you’re looking for a home run, a great investment for five years or 10 years or more, then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge.” — Ralph Wanger