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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 Church & Dwight Co Inc (NYSE: CHD) 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: 10/19/2011


End date: 10/18/2021
Start price/share: $21.84
End price/share: $82.92
Starting shares: 457.88
Ending shares: 535.04
Dividends reinvested/share: $7.39
Total return: 343.65%
Average annual return: 16.06%
Starting investment: $10,000.00
Ending investment: $44,379.26

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 16.06%. This would have turned a $10K investment made 10 years ago into $44,379.26 today (as of 10/18/2021). On a total return basis, that’s a result of 343.65% (something to think about: how might CHD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Church & Dwight Co Inc paid investors a total of $7.39/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 1.01/share, we calculate that CHD has a current yield of approximately 1.22%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.01 against the original $21.84/share purchase price. This works out to a yield on cost of 5.59%.

One more piece of investment wisdom to leave you with:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham