“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 Boston Properties Inc (NYSE: BXP)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 04/25/2014 |
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| End date: | 04/24/2024 | ||||
| Start price/share: | $117.37 | ||||
| End price/share: | $62.94 | ||||
| Starting shares: | 85.20 | ||||
| Ending shares: | 125.63 | ||||
| Dividends reinvested/share: | $40.04 | ||||
| Total return: | -20.93% | ||||
| Average annual return: | -2.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $7,906.80 | ||||
As we can see, the ten year investment result worked out poorly, with an annualized rate of return of -2.32%. This would have turned a $10K investment made 10 years ago into $7,906.80 today (as of 04/24/2024). On a total return basis, that’s a result of -20.93% (something to think about: how might BXP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Boston Properties Inc paid investors a total of $40.04/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 3.92/share, we calculate that BXP has a current yield of approximately 6.23%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.92 against the original $117.37/share purchase price. This works out to a yield on cost of 5.31%.
Another great investment quote to think about:
“It’s not how much money you make, but how much money you keep.” — Robert Kiyosaki
