“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a five year holding period for an investor who was considering J.B. Hunt Transport Services, Inc. (NASD: JBHT) back in 2020, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 03/18/2020 |
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| End date: | 03/17/2025 | ||||
| Start price/share: | $84.67 | ||||
| End price/share: | $149.46 | ||||
| Starting shares: | 118.11 | ||||
| Ending shares: | 123.40 | ||||
| Dividends reinvested/share: | $7.43 | ||||
| Total return: | 84.44% | ||||
| Average annual return: | 13.02% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $18,440.66 | ||||
As we can see, the five year investment result worked out quite well, with an annualized rate of return of 13.02%. This would have turned a $10K investment made 5 years ago into $18,440.66 today (as of 03/17/2025). On a total return basis, that’s a result of 84.44% (something to think about: how might JBHT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that J.B. Hunt Transport Services, Inc. paid investors a total of $7.43/share in dividends over the 5 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 JBHT has a current yield of approximately 1.18%. 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 $84.67/share purchase price. This works out to a yield on cost of 1.39%.
More investment wisdom to ponder:
“You make most of your money in a bear market, you just don’t realize it at the time.” — Shelby Davis
