“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 Healthpeak Properties Inc (NYSE: PEAK)? Today, we examine the outcome of a five year investment into the stock back in 2018.
| Start date: | 11/12/2018 |
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| End date: | 11/09/2023 | ||||
| Start price/share: | $28.82 | ||||
| End price/share: | $15.73 | ||||
| Starting shares: | 346.98 | ||||
| Ending shares: | 437.56 | ||||
| Dividends reinvested/share: | $6.56 | ||||
| Total return: | -31.17% | ||||
| Average annual return: | -7.21% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $6,881.51 | ||||
As we can see, the five year investment result worked out poorly, with an annualized rate of return of -7.21%. This would have turned a $10K investment made 5 years ago into $6,881.51 today (as of 11/09/2023). On a total return basis, that’s a result of -31.17% (something to think about: how might PEAK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Healthpeak Properties Inc paid investors a total of $6.56/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 1.2/share, we calculate that PEAK has a current yield of approximately 7.63%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.2 against the original $28.82/share purchase price. This works out to a yield on cost of 26.47%.
Here’s one more great investment quote before you go:
“The individual investor should act consistently as an investor and not as a speculator.” — Benjamin Graham
