On December 19, I published Create Wealth With A Long Term HEICO Investment on this site. Dividend Power subsequently requested I also cover HEICO in a guest post; it is accessible here.
For the sake of full disclosure, HEI.a was my 25th largest holding when I completed my 2023 Year End FFJ Portfolio Review.
In addition, one of the young investors I am helping on their journey to financial freedom acquired HEI.a shares on January 8 in a Tax Free Savings Account (TFSA). While this investor will incur a 15% dividend withholding tax on all dividends distributed, the dividend component of the HEI.a investment is immaterial.
HEI.a's Average Annual Total Return (AATR) over the past 10 years slightly exceeds 20%. I know historical performance does not predict future performance but I am reasonably confident this HEI.a investment should be able to generate at least a 15% AATR; the company's strategy is controlled growth with a focus on 15% - 20% bottom line growth.
Applying the Rule of 72, this HEI.a investment should be able to double in value in just under 5 years.
NOTE: The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Alternatively, it can compute the annual rate of compounded return from an investment, given how many years it will take to double the investment.
Should the AATR fall short of the company's minimum 15% bottom line growth and come in a 10%, the investment should theoretically double in value in ~7.2 years.
This young investor should not need to access any investment within their TFSA during their lifetime. If we err on the side of caution, however, and assume this young investor will access this investment in ~50 years, this investment should have had enough time to significantly appreciate in value.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I am long HEI.a.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation. I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
