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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 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 FirstEnergy Corp (NYSE: FE)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.

Start date: 10/31/2012


End date: 10/27/2022
Start price/share: $45.72
End price/share: $37.25
Starting shares: 218.72
Ending shares: 337.66
Dividends reinvested/share: $15.76
Total return: 25.78%
Average annual return: 2.32%
Starting investment: $10,000.00
Ending investment: $12,576.24

The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 2.32%. This would have turned a $10K investment made 10 years ago into $12,576.24 today (as of 10/27/2022). On a total return basis, that’s a result of 25.78% (something to think about: how might FE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that FirstEnergy Corp paid investors a total of $15.76/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 1.56/share, we calculate that FE has a current yield of approximately 4.19%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.56 against the original $45.72/share purchase price. This works out to a yield on cost of 9.16%.

More investment wisdom to ponder:
“Wide diversification is only required when investors do not understand what they are doing.” — Warren Buffett