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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 State Street Corp. (NYSE: STT)? Today, we examine the outcome of a decade-long investment into the stock back in 2009.

Start date: 07/06/2009


End date: 07/02/2019
Start price/share: $46.59
End price/share: $55.82
Starting shares: 214.64
Ending shares: 253.27
Dividends reinvested/share: $10.76
Total return: 41.38%
Average annual return: 3.53%
Starting investment: $10,000.00
Ending investment: $14,144.24

As we can see, the decade-long investment result worked out as follows, with an annualized rate of return of 3.53%. This would have turned a $10K investment made 10 years ago into $14,144.24 today (as of 07/02/2019). On a total return basis, that’s a result of 41.38% (something to think about: how might STT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that State Street Corp. paid investors a total of $10.76/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 1.88/share, we calculate that STT has a current yield of approximately 3.37%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.88 against the original $46.59/share purchase price. This works out to a yield on cost of 7.23%.

More investment wisdom to ponder:
“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