“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 Molson Coors Brewing Co. (NYSE: TAP)? Today, we examine the outcome of a decade-long investment into the stock back in 2009.
| Start date: | 11/16/2009 |
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| End date: | 11/13/2019 | ||||
| Start price/share: | $46.31 | ||||
| End price/share: | $51.95 | ||||
| Starting shares: | 215.94 | ||||
| Ending shares: | 275.50 | ||||
| Dividends reinvested/share: | $14.55 | ||||
| Total return: | 43.12% | ||||
| Average annual return: | 3.65% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,310.36 | ||||
As shown above, the decade-long investment result worked out as follows, with an annualized rate of return of 3.65%. This would have turned a $10K investment made 10 years ago into $14,310.36 today (as of 11/13/2019). On a total return basis, that’s a result of 43.12% (something to think about: how might TAP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Molson Coors Brewing Co. paid investors a total of $14.55/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 2.28/share, we calculate that TAP has a current yield of approximately 4.39%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.28 against the original $46.31/share purchase price. This works out to a yield on cost of 9.48%.
One more piece of investment wisdom to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
