“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 Marriott International, Inc. (NASD: MAR)? Today, we examine the outcome of a twenty year investment into the stock back in 2003.
| Start date: | 07/03/2003 |
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| End date: | 06/30/2023 | ||||
| Start price/share: | $17.98 | ||||
| End price/share: | $183.69 | ||||
| Starting shares: | 556.17 | ||||
| Ending shares: | 672.82 | ||||
| Dividends reinvested/share: | $12.97 | ||||
| Total return: | 1,135.90% | ||||
| Average annual return: | 13.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $123,536.17 | ||||
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 13.39%. This would have turned a $10K investment made 20 years ago into $123,536.17 today (as of 06/30/2023). On a total return basis, that’s a result of 1,135.90% (something to think about: how might MAR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Marriott International, Inc. paid investors a total of $12.97/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 2.08/share, we calculate that MAR has a current yield of approximately 1.13%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.08 against the original $17.98/share purchase price. This works out to a yield on cost of 6.28%.
More investment wisdom to ponder:
“The most important thing about an investment philosophy is that you have one.” — David Booth
