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 Unum Group (NYSE: UNM)? Today, we examine the outcome of a ten year investment into the stock back in 2010.

Start date: 11/16/2010


End date: 11/13/2020
Start price/share: $21.59
End price/share: $20.88
Starting shares: 463.18
Ending shares: 594.02
Dividends reinvested/share: $7.45
Total return: 24.03%
Average annual return: 2.18%
Starting investment: $10,000.00
Ending investment: $12,406.78

As we can see, the ten year investment result worked out as follows, with an annualized rate of return of 2.18%. This would have turned a $10K investment made 10 years ago into $12,406.78 today (as of 11/13/2020). On a total return basis, that’s a result of 24.03% (something to think about: how might UNM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Unum Group paid investors a total of $7.45/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 1.14/share, we calculate that UNM has a current yield of approximately 5.46%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.14 against the original $21.59/share purchase price. This works out to a yield on cost of 25.29%.

One more piece of investment wisdom to leave you with:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman