“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 Molson Coors Beverage Co (NYSE: TAP)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 10/08/2012 |
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| End date: | 10/05/2022 | ||||
| Start price/share: | $44.79 | ||||
| End price/share: | $48.46 | ||||
| Starting shares: | 223.26 | ||||
| Ending shares: | 278.53 | ||||
| Dividends reinvested/share: | $13.99 | ||||
| Total return: | 34.98% | ||||
| Average annual return: | 3.05% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $13,503.43 | ||||
The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 3.05%. This would have turned a $10K investment made 10 years ago into $13,503.43 today (as of 10/05/2022). On a total return basis, that’s a result of 34.98% (something to think about: how might TAP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Molson Coors Beverage Co paid investors a total of $13.99/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 1.52/share, we calculate that TAP has a current yield of approximately 3.14%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.52 against the original $44.79/share purchase price. This works out to a yield on cost of 7.01%.
One more piece of investment wisdom to leave you with:
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger
