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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

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a ten year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 10 years to 2011, investors considering an investment into shares of Air Products & Chemicals Inc (NYSE: APD) may have been pondering this very question and thinking about their potential investment result over a full ten year time horizon. Here’s how that would have worked out.

Start date: 08/09/2011


End date: 08/06/2021
Start price/share: $74.24
End price/share: $290.82
Starting shares: 134.70
Ending shares: 172.07
Dividends reinvested/share: $35.77
Total return: 400.42%
Average annual return: 17.47%
Starting investment: $10,000.00
Ending investment: $50,034.51

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.47%. This would have turned a $10K investment made 10 years ago into $50,034.51 today (as of 08/06/2021). On a total return basis, that’s a result of 400.42% (something to think about: how might APD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Air Products & Chemicals Inc paid investors a total of $35.77/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 6/share, we calculate that APD has a current yield of approximately 2.06%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 6 against the original $74.24/share purchase price. This works out to a yield on cost of 2.77%.

One more piece of investment wisdom to leave you with:
“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.” — Benjamin Graham