“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 Mosaic Co (NYSE: MOS)? Today, we examine the outcome of a decade-long investment into the stock back in 2011.
|Average annual return:||-1.14%|
As we can see, the decade-long investment result worked out poorly, with an annualized rate of return of -1.14%. This would have turned a $10K investment made 10 years ago into $8,917.02 today (as of 12/23/2021). On a total return basis, that’s a result of -10.80% (something to think about: how might MOS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Mosaic Co paid investors a total of $6.20/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 .45/share, we calculate that MOS has a current yield of approximately 1.15%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .45 against the original $52.33/share purchase price. This works out to a yield on cost of 2.20%.
More investment wisdom to ponder:
“You can get in much more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” — Benjamin Graham