“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 Texas Instruments Inc. (NASD: TXN)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 09/15/2011 |
|
|||
| End date: | 09/14/2021 | ||||
| Start price/share: | $27.71 | ||||
| End price/share: | $195.11 | ||||
| Starting shares: | 360.88 | ||||
| Ending shares: | 468.98 | ||||
| Dividends reinvested/share: | $20.98 | ||||
| Total return: | 815.03% | ||||
| Average annual return: | 24.76% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $91,470.30 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 24.76%. This would have turned a $10K investment made 10 years ago into $91,470.30 today (as of 09/14/2021). On a total return basis, that’s a result of 815.03% (something to think about: how might TXN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Texas Instruments Inc. paid investors a total of $20.98/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 4.08/share, we calculate that TXN has a current yield of approximately 2.09%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.08 against the original $27.71/share purchase price. This works out to a yield on cost of 7.54%.
More investment wisdom to ponder:
“If I’ve learned one thing in this life it’s this: even if you lose, don’t lose the lesson.” — Daymond John
