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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 Invesco Ltd (NYSE: IVZ)? Today, we examine the outcome of a decade-long investment into the stock back in 2011.

Start date: 02/11/2011


End date: 02/10/2021
Start price/share: $25.75
End price/share: $22.72
Starting shares: 388.35
Ending shares: 567.23
Dividends reinvested/share: $9.46
Total return: 28.87%
Average annual return: 2.57%
Starting investment: $10,000.00
Ending investment: $12,890.33

As shown above, the decade-long investment result worked out as follows, with an annualized rate of return of 2.57%. This would have turned a $10K investment made 10 years ago into $12,890.33 today (as of 02/10/2021). On a total return basis, that’s a result of 28.87% (something to think about: how might IVZ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Invesco Ltd paid investors a total of $9.46/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 .62/share, we calculate that IVZ has a current yield of approximately 2.73%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .62 against the original $25.75/share purchase price. This works out to a yield on cost of 10.60%.

More investment wisdom to ponder:
“All intelligent investing is value investing: acquiring more that you are paying for. You must value the business in order to value the stock.” — Charlie Munger