“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into EQT Corp (NYSE: EQT)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 06/10/2019 |
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| End date: | 06/07/2024 | ||||
| Start price/share: | $17.31 | ||||
| End price/share: | $40.54 | ||||
| Starting shares: | 577.70 | ||||
| Ending shares: | 608.36 | ||||
| Dividends reinvested/share: | $1.56 | ||||
| Total return: | 146.63% | ||||
| Average annual return: | 19.80% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $24,664.32 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 19.80%. This would have turned a $10K investment made 5 years ago into $24,664.32 today (as of 06/07/2024). On a total return basis, that’s a result of 146.63% (something to think about: how might EQT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that EQT Corp paid investors a total of $1.56/share in dividends over the 5 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 .63/share, we calculate that EQT has a current yield of approximately 1.55%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .63 against the original $17.31/share purchase price. This works out to a yield on cost of 8.95%.
One more investment quote to leave you with:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
