“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 Constellation Brands Inc (NYSE: STZ)? Today, we examine the outcome of a decade-long investment into the stock back in 2010.
|Average annual return:||25.48%|
As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 25.48%. This would have turned a $10K investment made 10 years ago into $96,891.40 today (as of 10/27/2020). On a total return basis, that’s a result of 869.02% (something to think about: how might STZ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Dividends are always an important investment factor to consider, and Constellation Brands Inc has paid $12.38/share in dividends to shareholders over the past 10 years we looked at above. Many an investor will only invest in stocks that pay dividends, so this component of total return is always an important consideration. Automated reinvestment of dividends into additional shares of stock can be a great way for an investor to compound their returns. The above calculations are done with the assuption that dividends received over time are reinvested (the calcuations use the closing price on ex-date).
Based upon the most recent annualized dividend rate of 3/share, we calculate that STZ has a current yield of approximately 1.74%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3 against the original $19.04/share purchase price. This works out to a yield on cost of 9.14%.
More investment wisdom to ponder:
“Buy not on optimism, but on arithmetic.” — Benjamin Graham