Photo credit:

“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 Invesco Ltd (NYSE: IVZ)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 03/20/2019


End date: 03/19/2024
Start price/share: $19.73
End price/share: $15.41
Starting shares: 506.84
Ending shares: 645.19
Dividends reinvested/share: $4.09
Total return: -0.58%
Average annual return: -0.12%
Starting investment: $10,000.00
Ending investment: $9,940.11

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -0.12%. This would have turned a $10K investment made 5 years ago into $9,940.11 today (as of 03/19/2024). On a total return basis, that’s a result of -0.58% (something to think about: how might IVZ shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Invesco Ltd paid investors a total of $4.09/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 .8/share, we calculate that IVZ has a current yield of approximately 5.19%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $19.73/share purchase price. This works out to a yield on cost of 26.31%.

More investment wisdom to ponder:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” — Benjamin Graham