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Sat. Jul 20th, 2024

Here’s how a 20-year ‘Buy and Hold’ period turned out for BA

By Vaseline May30,2024

“Someone is sitting in the shade today because someone planted a tree a long time ago.”

– Warren Buffett

The above quote from Warren Buffett is timeless and conveys the choice time horizon what every investor should think about before buying a stock they are considering. Behind every stock is a real company; what will that be company look like over a period of twenty years?

Today, let’s look back in time to 2004 and see what happened to investors who asked that exact question about Boeing Co. (NYSE: BA), by looking at investment performance over a twenty-year period.

Starting date: 01-06-2004
$10,000

01-06-2004
$53,948

29/05/2024
End date: 29/05/2024
Starting price/share: $45.88
Final price/share: $171.65
Starting shares: 217.96
End shares: 314.31
Dividends reinvested/share: $48.06
Total refund: 439.52%
Average annual return: 8.79%
Initial investment: $10,000.00
End investment: $53,948.58

As we can see, the investment performance over the past twenty years has been good, with an annualized return of 8.79%. This would have turned a $10,000 investment made twenty years ago into… $53,948.58 today (as of May 29, 2024). On a total return basis, that’s a result of 439.52% (something to think about: how might BA stock perform over time?) next one 20 years?). (These figures were calculated using the Dividend Channel DRIP Returns Calculator.)

In addition to the price changes, another part of BA’s total returns over the past two decades has been the payment from Boeing Co. of $48.06/share in dividends to shareholders. Automatically reinvesting dividends can be a wonderful way to boost returns, and for the above calculations we assume dividends are reinvested in additional shares. (The closing price on the ex-date is used for these calculations).

Based on the most recent annualized dividend rate of 8.22/share, we calculate that BA has a current yield of approximately 4.79%. Another interesting data point we can explore is return on costs. In other words, we can express the current annualized dividend of 8.22 versus the original purchase price of $45.88 per share. This amounts to a return on costs of 10.44%.

Even more investment wisdom to think about:
“If there’s one thing I’ve learned in this life, it’s this: Even if you lose, don’t lose the lesson.” – Daymond John

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