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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into MetLife Inc (NYSE: MET)? Today, we examine the outcome of a two-decade investment into the stock back in 2001.

Start date: 01/08/2001


End date: 01/05/2021
Start price/share: $29.30
End price/share: $46.65
Starting shares: 341.30
Ending shares: 527.85
Dividends reinvested/share: $17.42
Total return: 146.24%
Average annual return: 4.61%
Starting investment: $10,000.00
Ending investment: $24,636.06

As we can see, the two-decade investment result worked out as follows, with an annualized rate of return of 4.61%. This would have turned a $10K investment made 20 years ago into $24,636.06 today (as of 01/05/2021). On a total return basis, that’s a result of 146.24% (something to think about: how might MET shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that MetLife Inc paid investors a total of $17.42/share in dividends over the 20 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 1.84/share, we calculate that MET has a current yield of approximately 3.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.84 against the original $29.30/share purchase price. This works out to a yield on cost of 13.45%.

Here’s one more great investment quote before you go:
“The greater the passive income you can build, the freer you will become.” — Todd Fleming