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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 investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a ten year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Progressive Corp. (NYSE: PGR) back in 2009, holding through to today.

Start date: 05/04/2009


End date: 05/01/2019
Start price/share: $15.67
End price/share: $76.91
Starting shares: 638.16
Ending shares: 866.89
Dividends reinvested/share: $9.74
Total return: 566.72%
Average annual return: 20.90%
Starting investment: $10,000.00
Ending investment: $66,686.39

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 20.90%. This would have turned a $10K investment made 10 years ago into $66,686.39 today (as of 05/01/2019). On a total return basis, that’s a result of 566.72% (something to think about: how might PGR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Dividends are always an important investment factor to consider, and Progressive Corp. has paid $9.74/share in dividends to shareholders over the past 10 years we looked at above. Many an investor will only invest in stocks that pay dividends, so this component of total return is always an important consideration. Automated reinvestment of dividends into additional shares of stock can be a great way for an investor to compound their returns. The above calculations are done with the assuption that dividends received over time are reinvested (the calcuations use the closing price on ex-date).

Based upon the most recent annualized dividend rate of .10/share, we calculate that PGR has a current yield of approximately 0.13%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .10 against the original $15.67/share purchase price. This works out to a yield on cost of 0.83%.

More investment wisdom to ponder:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch