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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Hartford Financial Services Group Inc. (NYSE: HIG)? Today, we examine the outcome of a two-decade investment into the stock back in 2000.

Start date: 05/01/2000


End date: 04/29/2020
Start price/share: $54.69
End price/share: $41.15
Starting shares: 182.86
Ending shares: 275.44
Dividends reinvested/share: $19.39
Total return: 13.34%
Average annual return: 0.63%
Starting investment: $10,000.00
Ending investment: $11,338.92

The above analysis shows the two-decade investment result worked out as follows, with an annualized rate of return of 0.63%. This would have turned a $10K investment made 20 years ago into $11,338.92 today (as of 04/29/2020). On a total return basis, that’s a result of 13.34% (something to think about: how might HIG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Hartford Financial Services Group Inc. paid investors a total of $19.39/share in dividends over the 20 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 1.3/share, we calculate that HIG has a current yield of approximately 3.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.3 against the original $54.69/share purchase price. This works out to a yield on cost of 5.78%.

Here’s one more great investment quote before you go:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch