Photo credit:

“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


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