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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

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a decade-long period?

Today, let’s look backwards in time to 2011, and take a look at what happened to investors who asked that very question about Tractor Supply Co. (NASD: TSCO), by taking a look at the investment outcome over a decade-long holding period.

Start date: 09/09/2011


End date: 09/08/2021
Start price/share: $32.36
End price/share: $199.37
Starting shares: 309.02
Ending shares: 346.34
Dividends reinvested/share: $9.87
Total return: 590.51%
Average annual return: 21.30%
Starting investment: $10,000.00
Ending investment: $69,034.71

As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 21.30%. This would have turned a $10K investment made 10 years ago into $69,034.71 today (as of 09/08/2021). On a total return basis, that’s a result of 590.51% (something to think about: how might TSCO shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Tractor Supply Co. paid investors a total of $9.87/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 2.08/share, we calculate that TSCO has a current yield of approximately 1.04%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.08 against the original $32.36/share purchase price. This works out to a yield on cost of 3.21%.

One more piece of investment wisdom to leave you with:
“The right time for a company to finance its growth is not when it needs capital, but rather when the market is most receptive to providing capital.” — Michael Milken