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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 Flowserve Corp (NYSE: FLS)? Today, we examine the outcome of a decade-long investment into the stock back in 2010.

Start date: 07/09/2010


End date: 07/08/2020
Start price/share: $30.90
End price/share: $27.57
Starting shares: 323.62
Ending shares: 374.33
Dividends reinvested/share: $6.46
Total return: 3.20%
Average annual return: 0.32%
Starting investment: $10,000.00
Ending investment: $10,324.83

The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 0.32%. This would have turned a $10K investment made 10 years ago into $10,324.83 today (as of 07/08/2020). On a total return basis, that’s a result of 3.20% (something to think about: how might FLS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Flowserve Corp paid investors a total of $6.46/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 .8/share, we calculate that FLS has a current yield of approximately 2.90%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $30.90/share purchase price. This works out to a yield on cost of 9.39%.

Another great investment quote to think about:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis