“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 Mondelez International Inc (NASD: MDLZ)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 05/02/2011 |
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| End date: | 04/29/2021 | ||||
| Start price/share: | $33.79 | ||||
| End price/share: | $60.91 | ||||
| Starting shares: | 295.95 | ||||
| Ending shares: | 551.28 | ||||
| Dividends reinvested/share: | $23.04 | ||||
| Total return: | 235.78% | ||||
| Average annual return: | 12.88% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $33,586.91 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 12.88%. This would have turned a $10K investment made 10 years ago into $33,586.91 today (as of 04/29/2021). On a total return basis, that’s a result of 235.78% (something to think about: how might MDLZ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Mondelez International Inc paid investors a total of $23.04/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 1.26/share, we calculate that MDLZ has a current yield of approximately 2.07%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.26 against the original $33.79/share purchase price. This works out to a yield on cost of 6.13%.
Another great investment quote to think about:
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger
