“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Alexandria Real Estate Equities Inc (NYSE: ARE)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 05/06/2020 |
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| End date: | 05/05/2025 | ||||
| Start price/share: | $151.17 | ||||
| End price/share: | $73.54 | ||||
| Starting shares: | 66.15 | ||||
| Ending shares: | 78.86 | ||||
| Dividends reinvested/share: | $23.88 | ||||
| Total return: | -42.01% | ||||
| Average annual return: | -10.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $5,800.67 | ||||
The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -10.32%. This would have turned a $10K investment made 5 years ago into $5,800.67 today (as of 05/05/2025). On a total return basis, that’s a result of -42.01% (something to think about: how might ARE shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Alexandria Real Estate Equities Inc paid investors a total of $23.88/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 5.28/share, we calculate that ARE has a current yield of approximately 7.18%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.28 against the original $151.17/share purchase price. This works out to a yield on cost of 4.75%.
Here’s one more great investment quote before you go:
“Anyone who is not investing now is missing a tremendous opportunity.” — Carlos Slim
