“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 Boston Properties Inc (NYSE: BXP)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 10/30/2013 |
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| End date: | 10/27/2023 | ||||
| Start price/share: | $105.06 | ||||
| End price/share: | $52.42 | ||||
| Starting shares: | 95.18 | ||||
| Ending shares: | 141.09 | ||||
| Dividends reinvested/share: | $41.63 | ||||
| Total return: | -26.04% | ||||
| Average annual return: | -2.97% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $7,397.69 | ||||
The above analysis shows the ten year investment result worked out poorly, with an annualized rate of return of -2.97%. This would have turned a $10K investment made 10 years ago into $7,397.69 today (as of 10/27/2023). On a total return basis, that’s a result of -26.04% (something to think about: how might BXP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Boston Properties Inc paid investors a total of $41.63/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 3.92/share, we calculate that BXP has a current yield of approximately 7.48%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.92 against the original $105.06/share purchase price. This works out to a yield on cost of 7.12%.
Here’s one more great investment quote before you go:
“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.” — Benjamin Graham
