“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Dominion Energy Inc (NYSE: D)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 01/03/2014 |
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| End date: | 01/02/2024 | ||||
| Start price/share: | $63.51 | ||||
| End price/share: | $48.51 | ||||
| Starting shares: | 157.46 | ||||
| Ending shares: | 236.60 | ||||
| Dividends reinvested/share: | $29.15 | ||||
| Total return: | 14.78% | ||||
| Average annual return: | 1.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,480.68 | ||||
As shown above, the decade-long investment result worked out as follows, with an annualized rate of return of 1.39%. This would have turned a $10K investment made 10 years ago into $11,480.68 today (as of 01/02/2024). On a total return basis, that’s a result of 14.78% (something to think about: how might D shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Dominion Energy Inc paid investors a total of $29.15/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 2.67/share, we calculate that D has a current yield of approximately 5.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.67 against the original $63.51/share purchase price. This works out to a yield on cost of 8.66%.
Another great investment quote to think about:
“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.” — Warren Buffett
