“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 Anthem Inc (NYSE: ANTM)? Today, we examine the outcome of a decade-long investment into the stock back in 2009.
| Start date: | 07/09/2009 |
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| End date: | 07/08/2019 | ||||
| Start price/share: | $50.18 | ||||
| End price/share: | $284.74 | ||||
| Starting shares: | 199.28 | ||||
| Ending shares: | 227.63 | ||||
| Dividends reinvested/share: | $17.37 | ||||
| Total return: | 548.15% | ||||
| Average annual return: | 20.54% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $64,793.90 | ||||
As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 20.54%. This would have turned a $10K investment made 10 years ago into $64,793.90 today (as of 07/08/2019). On a total return basis, that’s a result of 548.15% (something to think about: how might ANTM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Anthem Inc paid investors a total of $17.37/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 3.2/share, we calculate that ANTM has a current yield of approximately 1.12%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.2 against the original $50.18/share purchase price. This works out to a yield on cost of 2.23%.
One more investment quote to leave you with:
“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” — Jim Cramer
