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

Start date: 05/10/2012


End date: 05/09/2022
Start price/share: $48.16
End price/share: $275.09
Starting shares: 207.64
Ending shares: 231.08
Dividends reinvested/share: $14.29
Total return: 535.68%
Average annual return: 20.31%
Starting investment: $10,000.00
Ending investment: $63,567.81

The above analysis shows the decade-long investment result worked out exceptionally well, with an annualized rate of return of 20.31%. This would have turned a $10K investment made 10 years ago into $63,567.81 today (as of 05/09/2022). On a total return basis, that’s a result of 535.68% (something to think about: how might AON shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Aon plc paid investors a total of $14.29/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 2.24/share, we calculate that AON has a current yield of approximately 0.81%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.24 against the original $48.16/share purchase price. This works out to a yield on cost of 1.68%.

One more piece of investment wisdom to leave you with:
“Value investing means really asking what are the best values, and not assuming that because something looks expensive that it is, or assuming that because a stock is down in price and trades at low multiples that it is a bargain.” — Bill Miller