“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 Expeditors International of Washington, Inc. (NYSE: EXPD)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 07/22/2019 |
|
|||
| End date: | 07/19/2024 | ||||
| Start price/share: | $74.67 | ||||
| End price/share: | $120.20 | ||||
| Starting shares: | 133.92 | ||||
| Ending shares: | 141.99 | ||||
| Dividends reinvested/share: | $6.15 | ||||
| Total return: | 70.67% | ||||
| Average annual return: | 11.29% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,066.85 | ||||
The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 11.29%. This would have turned a $10K investment made 5 years ago into $17,066.85 today (as of 07/19/2024). On a total return basis, that’s a result of 70.67% (something to think about: how might EXPD shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Expeditors International of Washington, Inc. paid investors a total of $6.15/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 1.46/share, we calculate that EXPD has a current yield of approximately 1.21%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.46 against the original $74.67/share purchase price. This works out to a yield on cost of 1.62%.
Here’s one more great investment quote before you go:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross
