“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 Molson Coors Beverage Co (NYSE: TAP)? Today, we examine the outcome of a twenty year investment into the stock back in 2003.
| Start date: | 01/03/2003 |
|
|||
| End date: | 12/30/2022 | ||||
| Start price/share: | $30.58 | ||||
| End price/share: | $51.52 | ||||
| Starting shares: | 327.01 | ||||
| Ending shares: | 496.56 | ||||
| Dividends reinvested/share: | $21.87 | ||||
| Total return: | 155.83% | ||||
| Average annual return: | 4.81% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $25,592.36 | ||||
As shown above, the twenty year investment result worked out as follows, with an annualized rate of return of 4.81%. This would have turned a $10K investment made 20 years ago into $25,592.36 today (as of 12/30/2022). On a total return basis, that’s a result of 155.83% (something to think about: how might TAP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Molson Coors Beverage Co paid investors a total of $21.87/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 1.52/share, we calculate that TAP 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 1.52 against the original $30.58/share purchase price. This works out to a yield on cost of 9.65%.
One more investment quote to leave you with:
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Charlie Munger
