“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into PPG Industries Inc (NYSE: PPG)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 06/02/2014 |
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| End date: | 05/30/2024 | ||||
| Start price/share: | $101.17 | ||||
| End price/share: | $129.12 | ||||
| Starting shares: | 98.84 | ||||
| Ending shares: | 116.52 | ||||
| Dividends reinvested/share: | $19.80 | ||||
| Total return: | 50.45% | ||||
| Average annual return: | 4.17% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,046.19 | ||||
The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 4.17%. This would have turned a $10K investment made 10 years ago into $15,046.19 today (as of 05/30/2024). On a total return basis, that’s a result of 50.45% (something to think about: how might PPG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that PPG Industries Inc paid investors a total of $19.80/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 2.6/share, we calculate that PPG has a current yield of approximately 2.01%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.6 against the original $101.17/share purchase price. This works out to a yield on cost of 1.99%.
Here’s one more great investment quote before you go:
“Don’t wait for the perfect time, you will wait forever. Always take advantage of the time you’re given and make it perfect.” — Daymond John
