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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 Ford Motor Co. (NYSE: F)? Today, we examine the outcome of a decade-long investment into the stock back in 2010.

Start date: 12/01/2010


End date: 11/30/2020
Start price/share: $16.46
End price/share: $9.08
Starting shares: 607.53
Ending shares: 896.59
Dividends reinvested/share: $4.68
Total return: -18.59%
Average annual return: -2.03%
Starting investment: $10,000.00
Ending investment: $8,144.83

As shown above, the decade-long investment result worked out poorly, with an annualized rate of return of -2.03%. This would have turned a $10K investment made 10 years ago into $8,144.83 today (as of 11/30/2020). On a total return basis, that’s a result of -18.59% (something to think about: how might F shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Ford Motor Co. paid investors a total of $4.68/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 .6/share, we calculate that F has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .6 against the original $16.46/share purchase price. This works out to a yield on cost of 0.00%.

More investment wisdom to ponder:
“Be fearful when others are greedy; be greedy when others are fearful.” — Warren Buffett