“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 two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Kimco Realty Corp (NYSE: KIM)? Today, we examine the outcome of a two-decade investment into the stock back in 2003.
| Start date: | 08/25/2003 |
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| End date: | 08/24/2023 | ||||
| Start price/share: | $20.40 | ||||
| End price/share: | $18.72 | ||||
| Starting shares: | 490.20 | ||||
| Ending shares: | 1,246.06 | ||||
| Dividends reinvested/share: | $20.09 | ||||
| Total return: | 133.26% | ||||
| Average annual return: | 4.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $23,310.57 | ||||
The above analysis shows the two-decade investment result worked out as follows, with an annualized rate of return of 4.32%. This would have turned a $10K investment made 20 years ago into $23,310.57 today (as of 08/24/2023). On a total return basis, that’s a result of 133.26% (something to think about: how might KIM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Kimco Realty Corp paid investors a total of $20.09/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 .92/share, we calculate that KIM has a current yield of approximately 4.91%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .92 against the original $20.40/share purchase price. This works out to a yield on cost of 24.07%.
More investment wisdom to ponder:
“Searching for companies is like looking for grubs under rocks: if you turn over 10 rocks you’ll likely find one grub; if you turn over 20 rocks you’ll find two.” — Peter Lynch
