“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Wynn Resorts Ltd (NASD: WYNN)? Today, we examine the outcome of a five year investment into the stock back in 2018.
| Start date: | 10/25/2018 |
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| End date: | 10/24/2023 | ||||
| Start price/share: | $103.22 | ||||
| End price/share: | $91.42 | ||||
| Starting shares: | 96.88 | ||||
| Ending shares: | 102.20 | ||||
| Dividends reinvested/share: | $6.00 | ||||
| Total return: | -6.57% | ||||
| Average annual return: | -1.35% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,342.98 | ||||
The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -1.35%. This would have turned a $10K investment made 5 years ago into $9,342.98 today (as of 10/24/2023). On a total return basis, that’s a result of -6.57% (something to think about: how might WYNN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Wynn Resorts Ltd paid investors a total of $6.00/share in dividends over the 5 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 1/share, we calculate that WYNN has a current yield of approximately 1.09%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $103.22/share purchase price. This works out to a yield on cost of 1.06%.
Another great investment quote to think about:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger
WYNN
