“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 Kimco Realty Corp (NYSE: KIM)? Today, we examine the outcome of a five year investment into the stock back in 2017.
| Start date: | 12/07/2017 |
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| End date: | 12/06/2022 | ||||
| Start price/share: | $18.16 | ||||
| End price/share: | $22.09 | ||||
| Starting shares: | 550.66 | ||||
| Ending shares: | 711.63 | ||||
| Dividends reinvested/share: | $4.35 | ||||
| Total return: | 57.20% | ||||
| Average annual return: | 9.47% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,720.83 | ||||
As we can see, the five year investment result worked out well, with an annualized rate of return of 9.47%. This would have turned a $10K investment made 5 years ago into $15,720.83 today (as of 12/06/2022). On a total return basis, that’s a result of 57.20% (something to think about: how might KIM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Kimco Realty Corp paid investors a total of $4.35/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 .92/share, we calculate that KIM has a current yield of approximately 4.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .92 against the original $18.16/share purchase price. This works out to a yield on cost of 22.91%.
More investment wisdom to ponder:
“Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” — Seth Klarman
