“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into AFLAC Inc (NYSE: AFL)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.
| Start date: | 04/16/2004 |
|
|||
| End date: | 04/15/2024 | ||||
| Start price/share: | $20.97 | ||||
| End price/share: | $80.27 | ||||
| Starting shares: | 476.87 | ||||
| Ending shares: | 746.33 | ||||
| Dividends reinvested/share: | $16.22 | ||||
| Total return: | 499.08% | ||||
| Average annual return: | 9.36% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $59,923.32 | ||||
The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 9.36%. This would have turned a $10K investment made 20 years ago into $59,923.32 today (as of 04/15/2024). On a total return basis, that’s a result of 499.08% (something to think about: how might AFL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that AFLAC Inc paid investors a total of $16.22/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 2/share, we calculate that AFL has a current yield of approximately 2.49%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2 against the original $20.97/share purchase price. This works out to a yield on cost of 11.87%.
Another great investment quote to think about:
“All the opportunity in the world means nothing if you don’t actually pull the trigger.” — Sam Zell
