“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 longterm investment horizon, where a twodecade 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 twodecade investment into the stock back in 2003.
Start date:  11/10/2003 


End date:  11/08/2023  
Start price/share:  $33.00  
End price/share:  $44.97  
Starting shares:  303.03  
Ending shares:  478.66  
Dividends reinvested/share:  $17.58  
Total return:  115.26%  
Average annual return:  3.91%  
Starting investment:  $10,000.00  
Ending investment:  $21,541.89 
As shown above, the twodecade investment result worked out as follows, with an annualized rate of return of 3.91%. This would have turned a $10K investment made 20 years ago into $21,541.89 today (as of 11/08/2023). On a total return basis, that’s a result of 115.26% (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.]
Notice that Bank of New York Mellon Corp paid investors a total of $17.58/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 exdate is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 1.68/share, we calculate that BK has a current yield of approximately 3.74%. 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 $33.00/share purchase price. This works out to a yield on cost of 11.33%.
More investment wisdom to ponder:
“Buy not on optimism, but on arithmetic.” — Benjamin Graham