“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 Mosaic Co (NYSE: MOS)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 07/06/2011 |
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| End date: | 07/02/2021 | ||||
| Start price/share: | $68.23 | ||||
| End price/share: | $31.44 | ||||
| Starting shares: | 146.56 | ||||
| Ending shares: | 174.09 | ||||
| Dividends reinvested/share: | $6.15 | ||||
| Total return: | -45.27% | ||||
| Average annual return: | -5.85% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $5,473.62 | ||||
As we can see, the ten year investment result worked out poorly, with an annualized rate of return of -5.85%. This would have turned a $10K investment made 10 years ago into $5,473.62 today (as of 07/02/2021). On a total return basis, that’s a result of -45.27% (something to think about: how might MOS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Mosaic Co paid investors a total of $6.15/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 .3/share, we calculate that MOS has a current yield of approximately 0.95%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .3 against the original $68.23/share purchase price. This works out to a yield on cost of 1.39%.
Here’s one more great investment quote before you go:
“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
