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“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into BorgWarner Inc (NYSE: BWA)? Today, we examine the outcome of a ten year investment into the stock back in 2013.

Start date: 02/08/2013


End date: 02/07/2023
Start price/share: $37.47
End price/share: $47.31
Starting shares: 266.88
Ending shares: 305.94
Dividends reinvested/share: $5.80
Total return: 44.74%
Average annual return: 3.77%
Starting investment: $10,000.00
Ending investment: $14,479.79

The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 3.77%. This would have turned a $10K investment made 10 years ago into $14,479.79 today (as of 02/07/2023). On a total return basis, that’s a result of 44.74% (something to think about: how might BWA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that BorgWarner Inc paid investors a total of $5.80/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 .68/share, we calculate that BWA has a current yield of approximately 1.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .68 against the original $37.47/share purchase price. This works out to a yield on cost of 3.84%.

Here’s one more great investment quote before you go:
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” — Benjamin Graham