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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 Perrigo Company plc (NYSE: PRGO)? Today, we examine the outcome of a decade-long investment into the stock back in 2010.

Start date: 10/29/2010


End date: 10/28/2020
Start price/share: $65.88
End price/share: $42.58
Starting shares: 151.79
Ending shares: 162.98
Dividends reinvested/share: $5.45
Total return: -30.60%
Average annual return: -3.59%
Starting investment: $10,000.00
Ending investment: $6,936.40

As shown above, the decade-long investment result worked out poorly, with an annualized rate of return of -3.59%. This would have turned a $10K investment made 10 years ago into $6,936.40 today (as of 10/28/2020). On a total return basis, that’s a result of -30.60% (something to think about: how might PRGO shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Perrigo Company plc paid investors a total of $5.45/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 .9/share, we calculate that PRGO has a current yield of approximately 2.11%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .9 against the original $65.88/share purchase price. This works out to a yield on cost of 3.20%.

Here’s one more great investment quote before you go:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross