Photo credit:

“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 ten year 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 Qualcomm Inc (NASD: QCOM), by taking a look at the investment outcome over a ten year holding period.

Start date: 09/13/2011


End date: 09/10/2021
Start price/share: $52.32
End price/share: $142.68
Starting shares: 191.13
Ending shares: 252.59
Dividends reinvested/share: $19.75
Total return: 260.39%
Average annual return: 13.68%
Starting investment: $10,000.00
Ending investment: $36,044.64

As shown above, the ten year investment result worked out quite well, with an annualized rate of return of 13.68%. This would have turned a $10K investment made 10 years ago into $36,044.64 today (as of 09/10/2021). On a total return basis, that’s a result of 260.39% (something to think about: how might QCOM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Qualcomm Inc paid investors a total of $19.75/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 2.72/share, we calculate that QCOM has a current yield of approximately 1.91%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.72 against the original $52.32/share purchase price. This works out to a yield on cost of 3.65%.

One more investment quote to leave you with:
“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” — George Soros