“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 HanesBrands Inc (NYSE: HBI)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 10/20/2011 |
|
|||
| End date: | 10/19/2021 | ||||
| Start price/share: | $6.56 | ||||
| End price/share: | $16.68 | ||||
| Starting shares: | 1,524.39 | ||||
| Ending shares: | 1,906.34 | ||||
| Dividends reinvested/share: | $4.14 | ||||
| Total return: | 217.98% | ||||
| Average annual return: | 12.26% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $31,807.21 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 12.26%. This would have turned a $10K investment made 10 years ago into $31,807.21 today (as of 10/19/2021). On a total return basis, that’s a result of 217.98% (something to think about: how might HBI shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that HanesBrands Inc paid investors a total of $4.14/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 .6/share, we calculate that HBI has a current yield of approximately 3.60%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .6 against the original $6.56/share purchase price. This works out to a yield on cost of 54.88%.
One more piece of investment wisdom to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
