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“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.

Start date: 01/13/2003


End date: 01/10/2023
Start price/share: $17.95
End price/share: $28.48
Starting shares: 557.10
Ending shares: 881.08
Dividends reinvested/share: $14.26
Total return: 150.93%
Average annual return: 4.71%
Starting investment: $10,000.00
Ending investment: $25,111.50

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