“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 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 Consolidated Edison Inc (NYSE: ED)? Today, we examine the outcome of a twenty year investment into the stock back in 2005.
| Start date: | 06/27/2005 |
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| End date: | 06/24/2025 | ||||
| Start price/share: | $46.13 | ||||
| End price/share: | $100.19 | ||||
| Starting shares: | 216.78 | ||||
| Ending shares: | 499.96 | ||||
| Dividends reinvested/share: | $53.45 | ||||
| Total return: | 400.91% | ||||
| Average annual return: | 8.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $50,115.96 | ||||
As we can see, the twenty year investment result worked out well, with an annualized rate of return of 8.39%. This would have turned a $10K investment made 20 years ago into $50,115.96 today (as of 06/24/2025). On a total return basis, that’s a result of 400.91% (something to think about: how might ED shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Consolidated Edison Inc paid investors a total of $53.45/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 3.4/share, we calculate that ED has a current yield of approximately 3.39%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.4 against the original $46.13/share purchase price. This works out to a yield on cost of 7.35%.
One more piece of investment wisdom to leave you with:
“The investor’s chief problem, even his worst enemy, is likely to be himself.” — Benjamin Graham
