“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 Crown Castle Inc (NYSE: CCI)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 11/05/2019 |
|
|||
| End date: | 11/04/2024 | ||||
| Start price/share: | $131.66 | ||||
| End price/share: | $108.36 | ||||
| Starting shares: | 75.95 | ||||
| Ending shares: | 93.38 | ||||
| Dividends reinvested/share: | $28.52 | ||||
| Total return: | 1.19% | ||||
| Average annual return: | 0.24% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,120.64 | ||||
As shown above, the five year investment result worked out as follows, with an annualized rate of return of 0.24%. This would have turned a $10K investment made 5 years ago into $10,120.64 today (as of 11/04/2024). On a total return basis, that’s a result of 1.19% (something to think about: how might CCI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Crown Castle Inc paid investors a total of $28.52/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 6.26/share, we calculate that CCI has a current yield of approximately 5.78%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 6.26 against the original $131.66/share purchase price. This works out to a yield on cost of 4.39%.
More investment wisdom to ponder:
“Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” — Seth Klarman
