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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 ten year 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 Kroger Co (NYSE: KR), by taking a look at the investment outcome over a ten year holding period.

Start date: 06/18/2012


End date: 06/15/2022
Start price/share: $11.41
End price/share: $50.88
Starting shares: 876.42
Ending shares: 1,046.56
Dividends reinvested/share: $5.13
Total return: 432.49%
Average annual return: 18.21%
Starting investment: $10,000.00
Ending investment: $53,252.88

As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 18.21%. This would have turned a $10K investment made 10 years ago into $53,252.88 today (as of 06/15/2022). On a total return basis, that’s a result of 432.49% (something to think about: how might KR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Kroger Co paid investors a total of $5.13/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 .84/share, we calculate that KR has a current yield of approximately 1.65%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .84 against the original $11.41/share purchase price. This works out to a yield on cost of 14.46%.

One more investment quote to leave you with:
“If you’re looking for a home run, a great investment for five years or 10 years or more, then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge.” — Ralph Wanger