“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 two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Sysco Corp (NYSE: SYY)? Today, we examine the outcome of a two-decade investment into the stock back in 2004.
| Start date: | 09/30/2004 |
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| End date: | 09/27/2024 | ||||
| Start price/share: | $29.92 | ||||
| End price/share: | $77.66 | ||||
| Starting shares: | 334.22 | ||||
| Ending shares: | 584.59 | ||||
| Dividends reinvested/share: | $25.09 | ||||
| Total return: | 353.99% | ||||
| Average annual return: | 7.86% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $45,434.77 | ||||
As we can see, the two-decade investment result worked out well, with an annualized rate of return of 7.86%. This would have turned a $10K investment made 20 years ago into $45,434.77 today (as of 09/27/2024). On a total return basis, that’s a result of 353.99% (something to think about: how might SYY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Sysco Corp paid investors a total of $25.09/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 2.04/share, we calculate that SYY has a current yield of approximately 2.63%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.04 against the original $29.92/share purchase price. This works out to a yield on cost of 8.79%.
More investment wisdom to ponder:
“Never test the depth of a river with both feet.” — Warren Buffett
