“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 BXP Inc (NYSE: BXP)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.
| Start date: | 09/13/2004 |
|
|||
| End date: | 09/11/2024 | ||||
| Start price/share: | $54.05 | ||||
| End price/share: | $76.29 | ||||
| Starting shares: | 185.01 | ||||
| Ending shares: | 439.36 | ||||
| Dividends reinvested/share: | $81.08 | ||||
| Total return: | 235.18% | ||||
| Average annual return: | 6.23% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $33,508.84 | ||||
The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 6.23%. This would have turned a $10K investment made 20 years ago into $33,508.84 today (as of 09/11/2024). On a total return basis, that’s a result of 235.18% (something to think about: how might BXP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that BXP Inc paid investors a total of $81.08/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 3.92/share, we calculate that BXP has a current yield of approximately 5.14%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.92 against the original $54.05/share purchase price. This works out to a yield on cost of 9.51%.
One more investment quote to leave you with:
“You can get in much more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” — Benjamin Graham
