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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

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a decade-long holding period for an investor who was considering Medtronic PLC (NYSE: MDT) back in 2011, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 05/31/2011


End date: 05/27/2021
Start price/share: $40.70
End price/share: $125.15
Starting shares: 245.70
Ending shares: 303.94
Dividends reinvested/share: $15.41
Total return: 280.38%
Average annual return: 14.30%
Starting investment: $10,000.00
Ending investment: $38,045.50

The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 14.30%. This would have turned a $10K investment made 10 years ago into $38,045.50 today (as of 05/27/2021). On a total return basis, that’s a result of 280.38% (something to think about: how might MDT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Medtronic PLC paid investors a total of $15.41/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 2.32/share, we calculate that MDT has a current yield of approximately 1.85%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.32 against the original $40.70/share purchase price. This works out to a yield on cost of 4.55%.

More investment wisdom to ponder:
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” — Charlie Munger