“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 Wynn Resorts Ltd (NASD: WYNN)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 11/08/2012 |
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| End date: | 11/07/2022 | ||||
| Start price/share: | $109.25 | ||||
| End price/share: | $72.28 | ||||
| Starting shares: | 91.53 | ||||
| Ending shares: | 112.32 | ||||
| Dividends reinvested/share: | $27.75 | ||||
| Total return: | -18.81% | ||||
| Average annual return: | -2.06% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $8,120.38 | ||||
As we can see, the decade-long investment result worked out poorly, with an annualized rate of return of -2.06%. This would have turned a $10K investment made 10 years ago into $8,120.38 today (as of 11/07/2022). On a total return basis, that’s a result of -18.81% (something to think about: how might WYNN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Wynn Resorts Ltd paid investors a total of $27.75/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 4/share, we calculate that WYNN has a current yield of approximately 5.53%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4 against the original $109.25/share purchase price. This works out to a yield on cost of 5.06%.
Here’s one more great investment quote before you go:
“When everyone is going right, look left.” — Sam Zell
