“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 DXC Technology Co (NYSE: DXC)? Today, we examine the outcome of a twenty year investment into the stock back in 2003.
|Average annual return:||4.71%|
The above analysis shows the twenty year investment result worked out as follows, with an annualized rate of return of 4.71%. This would have turned a $10K investment made 20 years ago into $25,111.50 today (as of 01/10/2023). On a total return basis, that’s a result of 150.93% (something to think about: how might DXC shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that DXC Technology Co paid investors a total of $14.26/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 .84/share, we calculate that DXC has a current yield of approximately 2.95%. 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 $17.95/share purchase price. This works out to a yield on cost of 16.43%.
Another great investment quote to think about:
“Sometimes buying early on the way down looks like being wrong, but it isn’t.” — Seth Klarman