“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 KKR & CO Inc (NYSE: KKR)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 11/01/2019 |
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| End date: | 10/31/2024 | ||||
| Start price/share: | $29.46 | ||||
| End price/share: | $138.24 | ||||
| Starting shares: | 339.44 | ||||
| Ending shares: | 359.50 | ||||
| Dividends reinvested/share: | $3.00 | ||||
| Total return: | 396.97% | ||||
| Average annual return: | 37.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $49,694.95 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 37.78%. This would have turned a $10K investment made 5 years ago into $49,694.95 today (as of 10/31/2024). On a total return basis, that’s a result of 396.97% (something to think about: how might KKR shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that KKR & CO Inc paid investors a total of $3.00/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 .7/share, we calculate that KKR has a current yield of approximately 0.51%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .7 against the original $29.46/share purchase price. This works out to a yield on cost of 1.73%.
Another great investment quote to think about:
“The right time for a company to finance its growth is not when it needs capital, but rather when the market is most receptive to providing capital.” — Michael Milken
