“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a two-decade holding period for an investor who was considering Regency Centers Corp (NASD: REG) back in 2003, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 04/24/2003 |
|
|||
| End date: | 04/21/2023 | ||||
| Start price/share: | $33.90 | ||||
| End price/share: | $60.72 | ||||
| Starting shares: | 294.99 | ||||
| Ending shares: | 680.79 | ||||
| Dividends reinvested/share: | $43.77 | ||||
| Total return: | 313.37% | ||||
| Average annual return: | 7.35% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $41,324.70 | ||||
The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 7.35%. This would have turned a $10K investment made 20 years ago into $41,324.70 today (as of 04/21/2023). On a total return basis, that’s a result of 313.37% (something to think about: how might REG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Regency Centers Corp paid investors a total of $43.77/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 2.6/share, we calculate that REG has a current yield of approximately 4.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.6 against the original $33.90/share purchase price. This works out to a yield on cost of 12.63%.
One more investment quote to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
