“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 Dominos Pizza Inc. (NYSE: DPZ)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 12/21/2012 |
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| End date: | 12/20/2022 | ||||
| Start price/share: | $42.90 | ||||
| End price/share: | $353.73 | ||||
| Starting shares: | 233.10 | ||||
| Ending shares: | 258.90 | ||||
| Dividends reinvested/share: | $22.48 | ||||
| Total return: | 815.79% | ||||
| Average annual return: | 24.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $91,561.57 | ||||
As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 24.78%. This would have turned a $10K investment made 10 years ago into $91,561.57 today (as of 12/20/2022). On a total return basis, that’s a result of 815.79% (something to think about: how might DPZ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Dominos Pizza Inc. paid investors a total of $22.48/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 4.4/share, we calculate that DPZ has a current yield of approximately 1.24%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.4 against the original $42.90/share purchase price. This works out to a yield on cost of 2.89%.
Here’s one more great investment quote before you go:
“All the opportunity in the world means nothing if you don’t actually pull the trigger.” — Sam Zell
