“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?
Today, let’s look backwards in time to 2014, and take a look at what happened to investors who asked that very question about Dover Corp (NYSE: DOV), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 12/16/2014 |
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| End date: | 12/13/2024 | ||||
| Start price/share: | $55.57 | ||||
| End price/share: | $201.01 | ||||
| Starting shares: | 179.95 | ||||
| Ending shares: | 216.21 | ||||
| Dividends reinvested/share: | $17.98 | ||||
| Total return: | 334.60% | ||||
| Average annual return: | 15.83% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $43,472.09 | ||||
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 15.83%. This would have turned a $10K investment made 10 years ago into $43,472.09 today (as of 12/13/2024). On a total return basis, that’s a result of 334.60% (something to think about: how might DOV shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Dover Corp paid investors a total of $17.98/share in dividends over the 10 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 2.06/share, we calculate that DOV has a current yield of approximately 1.02%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.06 against the original $55.57/share purchase price. This works out to a yield on cost of 1.84%.
Another great investment quote to think about:
“If I’ve learned one thing in this life it’s this: even if you lose, don’t lose the lesson.” — Daymond John
