“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Kimberly-Clark Corp. (NYSE: KMB)? Today, we examine the outcome of a ten year investment into the stock back in 2010.
| Start date: | 01/14/2010 |
|
|||
| End date: | 01/13/2020 | ||||
| Start price/share: | $60.42 | ||||
| End price/share: | $140.90 | ||||
| Starting shares: | 165.51 | ||||
| Ending shares: | 233.47 | ||||
| Dividends reinvested/share: | $33.62 | ||||
| Total return: | 228.95% | ||||
| Average annual return: | 12.64% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $32,890.32 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 12.64%. This would have turned a $10K investment made 10 years ago into $32,890.32 today (as of 01/13/2020). On a total return basis, that’s a result of 228.95% (something to think about: how might KMB shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Kimberly-Clark Corp. paid investors a total of $33.62/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 4.12/share, we calculate that KMB has a current yield of approximately 2.92%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.12 against the original $60.42/share purchase price. This works out to a yield on cost of 4.83%.
Another great investment quote to think about:
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” — Peter Lynch
