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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a decade-long period?

Today, let’s look backwards in time to 2009, and take a look at what happened to investors who asked that very question about MetLife Inc (NYSE: MET), by taking a look at the investment outcome over a decade-long holding period.

Start date: 04/06/2009
$10,000

04/06/2009
$26,269

04/04/2019
End date: 04/04/2019
Start price/share: $22.37
End price/share: $44.74
Starting shares: 447.03
Ending shares: 587.07
Dividends reinvested/share: $10.99
Total return: 162.65%
Average annual return: 10.14%
Starting investment: $10,000.00
Ending investment: $26,269.43

As we can see, the decade-long investment result worked out quite well, with an annualized rate of return of 10.14%. This would have turned a $10K investment made 10 years ago into $26,269.43 today (as of 04/04/2019). On a total return basis, that’s a result of 162.65% (something to think about: how might MET shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that MetLife Inc paid investors a total of $10.99/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 1.68/share, we calculate that MET has a current yield of approximately 3.76%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.68 against the original $22.37/share purchase price. This works out to a yield on cost of 16.81%.

One more investment quote to leave you with:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban