“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 Newmont Corp (NYSE: NEM)? Today, we examine the outcome of a ten year investment into the stock back in 2010.
| Start date: | 09/10/2010 |
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| End date: | 09/09/2020 | ||||
| Start price/share: | $60.68 | ||||
| End price/share: | $68.17 | ||||
| Starting shares: | 164.80 | ||||
| Ending shares: | 196.78 | ||||
| Dividends reinvested/share: | $7.11 | ||||
| Total return: | 34.15% | ||||
| Average annual return: | 2.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $13,415.25 | ||||
The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 2.98%. This would have turned a $10K investment made 10 years ago into $13,415.25 today (as of 09/09/2020). On a total return basis, that’s a result of 34.15% (something to think about: how might NEM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Newmont Corp paid investors a total of $7.11/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/share, we calculate that NEM has a current yield of approximately 1.47%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $60.68/share purchase price. This works out to a yield on cost of 2.42%.
More investment wisdom to ponder:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
