Photo credit:

“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 FirstEnergy Corp (NYSE: FE)? Today, we examine the outcome of a ten year investment into the stock back in 2012.

Start date: 01/09/2012


End date: 01/06/2022
Start price/share: $42.40
End price/share: $40.94
Starting shares: 235.85
Ending shares: 366.57
Dividends reinvested/share: $16.24
Total return: 50.07%
Average annual return: 4.14%
Starting investment: $10,000.00
Ending investment: $15,002.92

As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 4.14%. This would have turned a $10K investment made 10 years ago into $15,002.92 today (as of 01/06/2022). On a total return basis, that’s a result of 50.07% (something to think about: how might FE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that FirstEnergy Corp paid investors a total of $16.24/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 1.56/share, we calculate that FE has a current yield of approximately 3.81%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.56 against the original $42.40/share purchase price. This works out to a yield on cost of 8.99%.

Another great investment quote to think about:
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” — Peter Lynch