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“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 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 Bank of New York Mellon Corp (NYSE: BK)? Today, we examine the outcome of a two-decade investment into the stock back in 2003.

Start date: 09/08/2003


End date: 09/06/2023
Start price/share: $32.43
End price/share: $44.68
Starting shares: 308.36
Ending shares: 485.27
Dividends reinvested/share: $17.36
Total return: 116.82%
Average annual return: 3.94%
Starting investment: $10,000.00
Ending investment: $21,666.67

The above analysis shows the two-decade investment result worked out as follows, with an annualized rate of return of 3.94%. This would have turned a $10K investment made 20 years ago into $21,666.67 today (as of 09/06/2023). On a total return basis, that’s a result of 116.82% (something to think about: how might BK shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Beyond share price change, another component of BK’s total return these past 20 years has been the payment by Bank of New York Mellon Corp of $17.36/share in dividends to shareholders. Automatic reinvestment of dividends can be a wonderful way to compound returns, and for the above calculations we presume that dividends are reinvested into additional shares of stock. (For the purpose of these calcuations, the closing price on ex-date is used).

Based upon the most recent annualized dividend rate of 1.68/share, we calculate that BK has a current yield of approximately 3.76%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.68 against the original $32.43/share purchase price. This works out to a yield on cost of 11.59%.

One more investment quote to leave you with:
“Investing is the intersection of economics and psychology.” — Seth Klarman