“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Jefferies Group Inc. (NYSE: JEF)? Today, we examine the outcome of a decade-long investment into the stock back in 2009.
|Average annual return:||-0.50%|
As shown above, the decade-long investment result worked out poorly, with an annualized rate of return of -0.50%. This would have turned a $10K investment made 10 years ago into $9,511.23 today (as of 05/01/2019). On a total return basis, that’s a result of -4.89% (something to think about: how might JEF shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Jefferies Group Inc. paid investors a total of $2.66/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 .5/share, we calculate that JEF has a current yield of approximately 2.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .5 against the original $24.13/share purchase price. This works out to a yield on cost of 10.11%.
Here’s one more great investment quote before you go:
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” — George Soros