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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 Macy’s Inc (NYSE: M)? Today, we examine the outcome of a decade-long investment into the stock back in 2010.

Start date: 01/11/2010


End date: 01/09/2020
Start price/share: $16.62
End price/share: $17.71
Starting shares: 601.68
Ending shares: 841.21
Dividends reinvested/share: $10.91
Total return: 48.98%
Average annual return: 4.07%
Starting investment: $10,000.00
Ending investment: $14,902.38

As we can see, the decade-long investment result worked out as follows, with an annualized rate of return of 4.07%. This would have turned a $10K investment made 10 years ago into $14,902.38 today (as of 01/09/2020). On a total return basis, that’s a result of 48.98% (something to think about: how might M shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Macy’s Inc paid investors a total of $10.91/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 1.51/share, we calculate that M has a current yield of approximately 8.53%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.51 against the original $16.62/share purchase price. This works out to a yield on cost of 51.32%.

Here’s one more great investment quote before you go:
“The investor’s chief problem, even his worst enemy, is likely to be himself.” — Benjamin Graham