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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 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
$10,000

01/14/2010
$32,890

01/13/2020
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