“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 Nielsen Holdings PLC (NYSE: NLSN)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 11/02/2011 |
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| End date: | 11/01/2021 | ||||
| Start price/share: | $28.70 | ||||
| End price/share: | $21.16 | ||||
| Starting shares: | 348.43 | ||||
| Ending shares: | 444.15 | ||||
| Dividends reinvested/share: | $8.22 | ||||
| Total return: | -6.02% | ||||
| Average annual return: | -0.62% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,396.69 | ||||
The above analysis shows the ten year investment result worked out poorly, with an annualized rate of return of -0.62%. This would have turned a $10K investment made 10 years ago into $9,396.69 today (as of 11/01/2021). On a total return basis, that’s a result of -6.02% (something to think about: how might NLSN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Nielsen Holdings PLC paid investors a total of $8.22/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 .24/share, we calculate that NLSN has a current yield of approximately 1.13%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .24 against the original $28.70/share purchase price. This works out to a yield on cost of 3.94%.
Another great investment quote to think about:
“When I was young I thought that money was the most important thing in life; now that I am old I know that it is.” — Oscar Wilde
NLSL
