“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 two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Molson Coors Beverage Co (NYSE: TAP)? Today, we examine the outcome of a two-decade investment into the stock back in 2004.
| Start date: | 12/20/2004 |
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| End date: | 12/17/2024 | ||||
| Start price/share: | $37.16 | ||||
| End price/share: | $59.25 | ||||
| Starting shares: | 269.11 | ||||
| Ending shares: | 421.26 | ||||
| Dividends reinvested/share: | $24.45 | ||||
| Total return: | 149.60% | ||||
| Average annual return: | 4.68% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $24,967.96 | ||||
As shown above, the two-decade investment result worked out as follows, with an annualized rate of return of 4.68%. This would have turned a $10K investment made 20 years ago into $24,967.96 today (as of 12/17/2024). On a total return basis, that’s a result of 149.60% (something to think about: how might TAP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Molson Coors Beverage Co paid investors a total of $24.45/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 1.76/share, we calculate that TAP has a current yield of approximately 2.97%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.76 against the original $37.16/share purchase price. This works out to a yield on cost of 7.99%.
One more piece of investment wisdom to leave you with:
“Nearly every time I strayed from the herd, I’ve made a lot of money. Wandering away from the action is the way to find the new action.” — Jim Rogers
