“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Essex Property Trust Inc (NYSE: ESS)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 07/10/2014 |
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| End date: | 07/09/2024 | ||||
| Start price/share: | $187.46 | ||||
| End price/share: | $275.97 | ||||
| Starting shares: | 53.34 | ||||
| Ending shares: | 72.76 | ||||
| Dividends reinvested/share: | $76.61 | ||||
| Total return: | 100.80% | ||||
| Average annual return: | 7.22% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,087.41 | ||||
As shown above, the ten year investment result worked out well, with an annualized rate of return of 7.22%. This would have turned a $10K investment made 10 years ago into $20,087.41 today (as of 07/09/2024). On a total return basis, that’s a result of 100.80% (something to think about: how might ESS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Always an important consideration with a dividend-paying company is: should we reinvest our dividends?Over the past 10 years, Essex Property Trust Inc has paid $76.61/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock (for the above calculations, the reinvestment is performed using closing price on ex-div date for that dividend).
Based upon the most recent annualized dividend rate of 9.8/share, we calculate that ESS has a current yield of approximately 3.55%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 9.8 against the original $187.46/share purchase price. This works out to a yield on cost of 1.89%.
One more investment quote to leave you with:
“As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.” — Benjamin Graham
