“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 Expedia Group Inc (NASD: EXPE)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 04/29/2014 |
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| End date: | 04/26/2024 | ||||
| Start price/share: | $70.59 | ||||
| End price/share: | $135.70 | ||||
| Starting shares: | 141.66 | ||||
| Ending shares: | 150.01 | ||||
| Dividends reinvested/share: | $6.41 | ||||
| Total return: | 103.57% | ||||
| Average annual return: | 7.37% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,362.43 | ||||
As we can see, the ten year investment result worked out well, with an annualized rate of return of 7.37%. This would have turned a $10K investment made 10 years ago into $20,362.43 today (as of 04/26/2024). On a total return basis, that’s a result of 103.57% (something to think about: how might EXPE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Expedia Group Inc paid investors a total of $6.41/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 1.36/share, we calculate that EXPE has a current yield of approximately 1.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.36 against the original $70.59/share purchase price. This works out to a yield on cost of 1.42%.
One more piece of investment wisdom to leave you with:
“The four most dangerous words in investing are: ‘this time it’s different.'” — Sir John Templeton
