“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.
|Average annual return:||12.88%|
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