“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 Dominion Energy Inc (NYSE: D)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 09/19/2013 |
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| End date: | 09/18/2023 | ||||
| Start price/share: | $63.21 | ||||
| End price/share: | $48.63 | ||||
| Starting shares: | 158.20 | ||||
| Ending shares: | 236.33 | ||||
| Dividends reinvested/share: | $29.05 | ||||
| Total return: | 14.93% | ||||
| Average annual return: | 1.40% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,492.01 | ||||
As we can see, the ten year investment result worked out as follows, with an annualized rate of return of 1.40%. This would have turned a $10K investment made 10 years ago into $11,492.01 today (as of 09/18/2023). On a total return basis, that’s a result of 14.93% (something to think about: how might D shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Dominion Energy Inc paid investors a total of $29.05/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 2.67/share, we calculate that D has a current yield of approximately 5.49%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.67 against the original $63.21/share purchase price. This works out to a yield on cost of 8.69%.
Another great investment quote to think about:
“Cash is a fact, profit is an opinion.” — Alfred Rappaport
