“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Digital Realty Trust Inc (NYSE: DLR)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 03/12/2014 |
|
|||
| End date: | 03/11/2024 | ||||
| Start price/share: | $52.66 | ||||
| End price/share: | $145.50 | ||||
| Starting shares: | 189.90 | ||||
| Ending shares: | 281.89 | ||||
| Dividends reinvested/share: | $41.20 | ||||
| Total return: | 310.14% | ||||
| Average annual return: | 15.15% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $41,018.06 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 15.15%. This would have turned a $10K investment made 10 years ago into $41,018.06 today (as of 03/11/2024). On a total return basis, that’s a result of 310.14% (something to think about: how might DLR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Always an important consideration with a dividend-paying company is: should we reinvest our dividends?Over the past 10 years, Digital Realty Trust Inc has paid $41.20/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock (for the above calculations, the reinvestment is performed using closing price on ex-div date for that dividend).
Based upon the most recent annualized dividend rate of 4.88/share, we calculate that DLR has a current yield of approximately 3.35%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.88 against the original $52.66/share purchase price. This works out to a yield on cost of 6.36%.
More investment wisdom to ponder:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch
