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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 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.

Start date: 05/04/2009


End date: 05/01/2019
Start price/share: $24.13
End price/share: $20.47
Starting shares: 414.42
Ending shares: 464.65
Dividends reinvested/share: $2.66
Total return: -4.89%
Average annual return: -0.50%
Starting investment: $10,000.00
Ending investment: $9,511.23

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