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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 General Mills Inc (NYSE: GIS), by taking a look at the investment outcome over a ten year holding period.

Start date: 07/23/2012


End date: 07/20/2022
Start price/share: $38.21
End price/share: $73.40
Starting shares: 261.71
Ending shares: 366.33
Dividends reinvested/share: $18.39
Total return: 168.89%
Average annual return: 10.40%
Starting investment: $10,000.00
Ending investment: $26,888.90

As we can see, the ten year investment result worked out quite well, with an annualized rate of return of 10.40%. This would have turned a $10K investment made 10 years ago into $26,888.90 today (as of 07/20/2022). On a total return basis, that’s a result of 168.89% (something to think about: how might GIS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that General Mills Inc paid investors a total of $18.39/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 2.16/share, we calculate that GIS has a current yield of approximately 2.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.16 against the original $38.21/share purchase price. This works out to a yield on cost of 7.69%.

One more investment quote to leave you with:
“You can’t restate a dividend.” — Malon Wilkus