“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 Camden Property Trust (NYSE: CPT)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.
| Start date: | 09/07/2004 |
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| End date: | 09/05/2024 | ||||
| Start price/share: | $47.75 | ||||
| End price/share: | $124.13 | ||||
| Starting shares: | 209.42 | ||||
| Ending shares: | 487.99 | ||||
| Dividends reinvested/share: | $60.79 | ||||
| Total return: | 505.74% | ||||
| Average annual return: | 9.42% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $60,569.72 | ||||
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 9.42%. This would have turned a $10K investment made 20 years ago into $60,569.72 today (as of 09/05/2024). On a total return basis, that’s a result of 505.74% (something to think about: how might CPT shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Camden Property Trust paid investors a total of $60.79/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 4.12/share, we calculate that CPT has a current yield of approximately 3.32%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.12 against the original $47.75/share purchase price. This works out to a yield on cost of 6.95%.
Another great investment quote to think about:
“Taking risks is really the only way to consistently achieve above-average returns.” — Sam Zell
