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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a decade-long holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into M & T Bank Corp (NYSE: MTB) back in 2009: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full decade-long investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.

Start date: 07/20/2009


End date: 07/18/2019
Start price/share: $57.11
End price/share: $162.76
Starting shares: 175.10
Ending shares: 229.39
Dividends reinvested/share: $29.55
Total return: 273.36%
Average annual return: 14.08%
Starting investment: $10,000.00
Ending investment: $37,333.19

The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 14.08%. This would have turned a $10K investment made 10 years ago into $37,333.19 today (as of 07/18/2019). On a total return basis, that’s a result of 273.36% (something to think about: how might MTB shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that M & T Bank Corp paid investors a total of $29.55/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 4/share, we calculate that MTB has a current yield of approximately 2.46%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4 against the original $57.11/share purchase price. This works out to a yield on cost of 4.31%.

Another great investment quote to think about:
“The most important thing about an investment philosophy is that you have one.” — David Booth