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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 Walgreens Boots Alliance Inc (NASD: WBA)? Today, we examine the outcome of a decade-long investment into the stock back in 2011.

Start date: 01/07/2011


End date: 01/06/2021
Start price/share: $40.08
End price/share: $43.03
Starting shares: 249.50
Ending shares: 319.31
Dividends reinvested/share: $14.03
Total return: 37.40%
Average annual return: 3.23%
Starting investment: $10,000.00
Ending investment: $13,744.69

The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 3.23%. This would have turned a $10K investment made 10 years ago into $13,744.69 today (as of 01/06/2021). On a total return basis, that’s a result of 37.40% (something to think about: how might WBA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Walgreens Boots Alliance Inc paid investors a total of $14.03/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 1.87/share, we calculate that WBA has a current yield of approximately 4.35%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.87 against the original $40.08/share purchase price. This works out to a yield on cost of 10.85%.

Another great investment quote to think about:
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Charlie Munger