“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 PerkinElmer, Inc. (NYSE: PKI)? Today, we examine the outcome of a five year investment into the stock back in 2015.
| Start date: | 10/30/2015 |
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| End date: | 10/29/2020 | ||||
| Start price/share: | $51.64 | ||||
| End price/share: | $128.79 | ||||
| Starting shares: | 193.65 | ||||
| Ending shares: | 197.44 | ||||
| Dividends reinvested/share: | $1.40 | ||||
| Total return: | 154.29% | ||||
| Average annual return: | 20.51% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $25,429.48 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 20.51%. This would have turned a $10K investment made 5 years ago into $25,429.48 today (as of 10/29/2020). On a total return basis, that’s a result of 154.29% (something to think about: how might PKI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that PerkinElmer, Inc. paid investors a total of $1.40/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 .28/share, we calculate that PKI has a current yield of approximately 0.22%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .28 against the original $51.64/share purchase price. This works out to a yield on cost of 0.43%.
One more piece of investment wisdom to leave you with:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban
