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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

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a ten year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 10 years to 2012, investors considering an investment into shares of Becton, Dickinson & Co (NYSE: BDX) may have been pondering this very question and thinking about their potential investment result over a full ten year time horizon. Here’s how that would have worked out.

Start date: 03/23/2012
$10,000

03/23/2012
$40,753

03/22/2022
End date: 03/22/2022
Start price/share: $76.40
End price/share: $264.87
Starting shares: 130.89
Ending shares: 153.81
Dividends reinvested/share: $27.32
Total return: 307.39%
Average annual return: 15.08%
Starting investment: $10,000.00
Ending investment: $40,753.57

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 15.08%. This would have turned a $10K investment made 10 years ago into $40,753.57 today (as of 03/22/2022). On a total return basis, that’s a result of 307.39% (something to think about: how might BDX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Becton, Dickinson & Co paid investors a total of $27.32/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 3.48/share, we calculate that BDX has a current yield of approximately 1.31%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.48 against the original $76.40/share purchase price. This works out to a yield on cost of 1.71%.

Here’s one more great investment quote before you go:
“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” — Jim Cramer