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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 2010, and take a look at what happened to investors who asked that very question about Morgan Stanley (NYSE: MS), by taking a look at the investment outcome over a decade-long holding period.

Start date: 06/09/2010


End date: 06/08/2020
Start price/share: $25.13
End price/share: $50.15
Starting shares: 397.93
Ending shares: 470.51
Dividends reinvested/share: $6.30
Total return: 135.96%
Average annual return: 8.96%
Starting investment: $10,000.00
Ending investment: $23,598.00

As we can see, the decade-long investment result worked out well, with an annualized rate of return of 8.96%. This would have turned a $10K investment made 10 years ago into $23,598.00 today (as of 06/08/2020). On a total return basis, that’s a result of 135.96% (something to think about: how might MS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Morgan Stanley paid investors a total of $6.30/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 1.4/share, we calculate that MS has a current yield of approximately 2.79%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.4 against the original $25.13/share purchase price. This works out to a yield on cost of 11.10%.

Another great investment quote to think about:
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” — Benjamin Graham