“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 C.H. Robinson Worldwide, Inc. (NASD: CHRW)? Today, we examine the outcome of a twenty year investment into the stock back in 2002.
| Start date: | 11/29/2002 |
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| End date: | 11/28/2022 | ||||
| Start price/share: | $15.28 | ||||
| End price/share: | $97.67 | ||||
| Starting shares: | 654.45 | ||||
| Ending shares: | 965.24 | ||||
| Dividends reinvested/share: | $26.06 | ||||
| Total return: | 842.75% | ||||
| Average annual return: | 11.86% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $94,195.41 | ||||
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 11.86%. This would have turned a $10K investment made 20 years ago into $94,195.41 today (as of 11/28/2022). On a total return basis, that’s a result of 842.75% (something to think about: how might CHRW shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that C.H. Robinson Worldwide, Inc. paid investors a total of $26.06/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 2.44/share, we calculate that CHRW has a current yield of approximately 2.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.44 against the original $15.28/share purchase price. This works out to a yield on cost of 16.36%.
More investment wisdom to ponder:
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.” — Warren Buffett
