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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a decade-long period?

Today, let’s look backwards in time to 2012, and take a look at what happened to investors who asked that very question about Qualcomm Inc (NASD: QCOM), by taking a look at the investment outcome over a decade-long holding period.

Start date: 04/18/2012


End date: 04/14/2022
Start price/share: $66.99
End price/share: $136.91
Starting shares: 149.28
Ending shares: 197.36
Dividends reinvested/share: $20.68
Total return: 170.21%
Average annual return: 10.46%
Starting investment: $10,000.00
Ending investment: $27,027.98

As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 10.46%. This would have turned a $10K investment made 10 years ago into $27,027.98 today (as of 04/14/2022). On a total return basis, that’s a result of 170.21% (something to think about: how might QCOM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Qualcomm Inc paid investors a total of $20.68/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/share, we calculate that QCOM has a current yield of approximately 2.19%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3 against the original $66.99/share purchase price. This works out to a yield on cost of 3.27%.

Another great investment quote to think about:
“The stock market is a device to transfer money from the impatient to the patient.” — Warren Buffett