“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Iron Mountain Inc (NYSE: IRM)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.
| Start date: | 09/07/2004 |
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| End date: | 09/04/2024 | ||||
| Start price/share: | $19.29 | ||||
| End price/share: | $112.87 | ||||
| Starting shares: | 518.40 | ||||
| Ending shares: | 1,239.34 | ||||
| Dividends reinvested/share: | $31.54 | ||||
| Total return: | 1,298.84% | ||||
| Average annual return: | 14.10% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $139,967.36 | ||||
The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 14.10%. This would have turned a $10K investment made 20 years ago into $139,967.36 today (as of 09/04/2024). On a total return basis, that’s a result of 1,298.84% (something to think about: how might IRM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Iron Mountain Inc paid investors a total of $31.54/share in dividends over the 20 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 2.86/share, we calculate that IRM has a current yield of approximately 2.53%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.86 against the original $19.29/share purchase price. This works out to a yield on cost of 13.12%.
One more piece of investment wisdom to leave you with:
“I’d like to live as a poor man with lots of money.” — Pablo Picasso
