“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Juniper Networks Inc (NYSE: JNPR)? Today, we examine the outcome of a two-decade investment into the stock back in 2004.
| Start date: | 04/05/2004 |
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| End date: | 04/04/2024 | ||||
| Start price/share: | $27.52 | ||||
| End price/share: | $36.97 | ||||
| Starting shares: | 363.37 | ||||
| Ending shares: | 460.78 | ||||
| Dividends reinvested/share: | $6.42 | ||||
| Total return: | 70.35% | ||||
| Average annual return: | 2.70% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,042.59 | ||||
As we can see, the two-decade investment result worked out as follows, with an annualized rate of return of 2.70%. This would have turned a $10K investment made 20 years ago into $17,042.59 today (as of 04/04/2024). On a total return basis, that’s a result of 70.35% (something to think about: how might JNPR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Juniper Networks Inc paid investors a total of $6.42/share in dividends over the 20 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 .88/share, we calculate that JNPR has a current yield of approximately 2.38%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .88 against the original $27.52/share purchase price. This works out to a yield on cost of 8.65%.
Another great investment quote to think about:
“If you’re looking for a home run, a great investment for five years or 10 years or more, then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge.” — Ralph Wanger
