“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 Walt Disney Co. (NYSE: DIS)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 04/29/2014 |
|
|||
| End date: | 04/26/2024 | ||||
| Start price/share: | $78.64 | ||||
| End price/share: | $112.73 | ||||
| Starting shares: | 127.16 | ||||
| Ending shares: | 138.58 | ||||
| Dividends reinvested/share: | $9.41 | ||||
| Total return: | 56.22% | ||||
| Average annual return: | 4.56% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,619.09 | ||||
As we can see, the ten year investment result worked out as follows, with an annualized rate of return of 4.56%. This would have turned a $10K investment made 10 years ago into $15,619.09 today (as of 04/26/2024). On a total return basis, that’s a result of 56.22% (something to think about: how might DIS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Walt Disney Co. paid investors a total of $9.41/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 .90/share, we calculate that DIS has a current yield of approximately 0.80%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .90 against the original $78.64/share purchase price. This works out to a yield on cost of 1.02%.
More investment wisdom to ponder:
“Sometimes buying early on the way down looks like being wrong, but it isn’t.” — Seth Klarman
