“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Boeing Co. (NYSE: BA)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 11/19/2014 |
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| End date: | 11/18/2024 | ||||
| Start price/share: | $131.61 | ||||
| End price/share: | $143.87 | ||||
| Starting shares: | 75.98 | ||||
| Ending shares: | 86.91 | ||||
| Dividends reinvested/share: | $30.80 | ||||
| Total return: | 25.04% | ||||
| Average annual return: | 2.26% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $12,505.79 | ||||
As we can see, the decade-long investment result worked out as follows, with an annualized rate of return of 2.26%. This would have turned a $10K investment made 10 years ago into $12,505.79 today (as of 11/18/2024). On a total return basis, that’s a result of 25.04% (something to think about: how might BA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Boeing Co. paid investors a total of $30.80/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 8.22/share, we calculate that BA has a current yield of approximately 5.71%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 8.22 against the original $131.61/share purchase price. This works out to a yield on cost of 4.34%.
One more investment quote to leave you with:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
