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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a decade-long period?

Today, let’s look backwards in time to 2009, and take a look at what happened to investors who asked that very question about Aon plc (NYSE: AON), by taking a look at the investment outcome over a decade-long holding period.

Start date: 12/17/2009


End date: 12/16/2019
Start price/share: $37.89
End price/share: $207.01
Starting shares: 263.92
Ending shares: 297.45
Dividends reinvested/share: $10.96
Total return: 515.76%
Average annual return: 19.93%
Starting investment: $10,000.00
Ending investment: $61,587.78

As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 19.93%. This would have turned a $10K investment made 10 years ago into $61,587.78 today (as of 12/16/2019). On a total return basis, that’s a result of 515.76% (something to think about: how might AON shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Aon plc paid investors a total of $10.96/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 1.76/share, we calculate that AON has a current yield of approximately 0.85%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.76 against the original $37.89/share purchase price. This works out to a yield on cost of 2.24%.

One more investment quote to leave you with:
“In the end, how your investments behave is much less important than how you behave.” — Benjamin Graham