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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 Warren Buffett investment philosophy calls for a long-term investment horizon, where a decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into AT&T Inc (NYSE: T)? Today, we examine the outcome of a decade-long investment into the stock back in 2011.

Start date: 10/28/2011


End date: 10/27/2021
Start price/share: $29.74
End price/share: $25.06
Starting shares: 336.25
Ending shares: 593.51
Dividends reinvested/share: $19.36
Total return: 48.73%
Average annual return: 4.05%
Starting investment: $10,000.00
Ending investment: $14,877.00

The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 4.05%. This would have turned a $10K investment made 10 years ago into $14,877.00 today (as of 10/27/2021). On a total return basis, that’s a result of 48.73% (something to think about: how might T shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that AT&T Inc paid investors a total of $19.36/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 T has a current yield of approximately 8.30%. 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 $29.74/share purchase price. This works out to a yield on cost of 27.91%.

One more piece of investment wisdom to leave you with:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch