“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Expeditors International of Washington, Inc. (NASD: EXPD)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
| Start date: | 01/06/2012 |
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| End date: | 01/05/2022 | ||||
| Start price/share: | $41.66 | ||||
| End price/share: | $129.67 | ||||
| Starting shares: | 240.04 | ||||
| Ending shares: | 275.07 | ||||
| Dividends reinvested/share: | $8.26 | ||||
| Total return: | 256.68% | ||||
| Average annual return: | 13.55% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $35,659.38 | ||||
As we can see, the ten year investment result worked out quite well, with an annualized rate of return of 13.55%. This would have turned a $10K investment made 10 years ago into $35,659.38 today (as of 01/05/2022). On a total return basis, that’s a result of 256.68% (something to think about: how might EXPD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Expeditors International of Washington, Inc. paid investors a total of $8.26/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 1.16/share, we calculate that EXPD has a current yield of approximately 0.89%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.16 against the original $41.66/share purchase price. This works out to a yield on cost of 2.14%.
Another great investment quote to think about:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch
