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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 DuPont (NYSE: DD)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.

Start date: 01/24/2012
$10,000

01/24/2012
$15,322

01/21/2022
End date: 01/21/2022
Start price/share: $67.09
End price/share: $77.47
Starting shares: 149.05
Ending shares: 197.77
Dividends reinvested/share: $26.57
Total return: 53.22%
Average annual return: 4.36%
Starting investment: $10,000.00
Ending investment: $15,322.89

The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 4.36%. This would have turned a $10K investment made 10 years ago into $15,322.89 today (as of 01/21/2022). On a total return basis, that’s a result of 53.22% (something to think about: how might DD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that DuPont paid investors a total of $26.57/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 1.2/share, we calculate that DD has a current yield of approximately 1.55%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.2 against the original $67.09/share purchase price. This works out to a yield on cost of 2.31%.

Here’s one more great investment quote before you go:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett