“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a decade-long holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Welltower Inc (NYSE: WELL) back in 2014, holding through to today.
| Start date: | 08/04/2014 |
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| End date: | 08/01/2024 | ||||
| Start price/share: | $64.70 | ||||
| End price/share: | $112.39 | ||||
| Starting shares: | 154.56 | ||||
| Ending shares: | 235.36 | ||||
| Dividends reinvested/share: | $30.01 | ||||
| Total return: | 164.52% | ||||
| Average annual return: | 10.22% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $26,460.87 | ||||
As we can see, the decade-long investment result worked out quite well, with an annualized rate of return of 10.22%. This would have turned a $10K investment made 10 years ago into $26,460.87 today (as of 08/01/2024). On a total return basis, that’s a result of 164.52% (something to think about: how might WELL shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Dividends are always an important investment factor to consider, and Welltower Inc has paid $30.01/share in dividends to shareholders over the past 10 years we looked at above. Many an investor will only invest in stocks that pay dividends, so this component of total return is always an important consideration. Automated reinvestment of dividends into additional shares of stock can be a great way for an investor to compound their returns. The above calculations are done with the assuption that dividends received over time are reinvested (the calcuations use the closing price on ex-date).
Based upon the most recent annualized dividend rate of 2.44/share, we calculate that WELL has a current yield of approximately 2.17%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.44 against the original $64.70/share purchase price. This works out to a yield on cost of 3.35%.
More investment wisdom to ponder:
“While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” — Seth Klarman
