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“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Mattel Inc (NASD: MAT)? Today, we examine the outcome of a ten year investment into the stock back in 2009.

Start date: 04/16/2009
$10,000

04/16/2009
$14,634

04/15/2019
End date: 04/15/2019
Start price/share: $13.03
End price/share: $13.19
Starting shares: 767.46
Ending shares: 1,109.08
Dividends reinvested/share: $10.65
Total return: 46.29%
Average annual return: 3.88%
Starting investment: $10,000.00
Ending investment: $14,634.06

As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 3.88%. This would have turned a $10K investment made 10 years ago into $14,634.06 today (as of 04/15/2019). On a total return basis, that’s a result of 46.29% (something to think about: how might MAT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Mattel Inc paid investors a total of $10.65/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 .6/share, we calculate that MAT has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .6 against the original $13.03/share purchase price. This works out to a yield on cost of 0.00%.

Another great investment quote to think about:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham