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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a decade-long holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Martin Marietta Materials, Inc. (NYSE: MLM) back in 2011: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full decade-long investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.

Start date: 11/16/2011
$10,000

11/16/2011
$62,550

11/15/2021
End date: 11/15/2021
Start price/share: $75.12
End price/share: $418.63
Starting shares: 133.12
Ending shares: 149.36
Dividends reinvested/share: $18.05
Total return: 525.28%
Average annual return: 20.11%
Starting investment: $10,000.00
Ending investment: $62,550.06

As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 20.11%. This would have turned a $10K investment made 10 years ago into $62,550.06 today (as of 11/15/2021). On a total return basis, that’s a result of 525.28% (something to think about: how might MLM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Martin Marietta Materials, Inc. paid investors a total of $18.05/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 2.44/share, we calculate that MLM has a current yield of approximately 0.58%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.44 against the original $75.12/share purchase price. This works out to a yield on cost of 0.77%.

One more piece of investment wisdom to leave you with:
“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.” — William Feather