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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 ten year 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 Anthem Inc (NYSE: ANTM), by taking a look at the investment outcome over a ten year holding period.

Start date: 08/16/2010


End date: 08/13/2020
Start price/share: $51.62
End price/share: $282.33
Starting shares: 193.72
Ending shares: 224.12
Dividends reinvested/share: $20.87
Total return: 532.75%
Average annual return: 20.26%
Starting investment: $10,000.00
Ending investment: $63,272.06

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 20.26%. This would have turned a $10K investment made 10 years ago into $63,272.06 today (as of 08/13/2020). On a total return basis, that’s a result of 532.75% (something to think about: how might ANTM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Anthem Inc paid investors a total of $20.87/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 3.8/share, we calculate that ANTM has a current yield of approximately 1.35%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.8 against the original $51.62/share purchase price. This works out to a yield on cost of 2.62%.

More investment wisdom to ponder:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett