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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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Dollar General Corp (NYSE: DG)? Today, we examine the outcome of a ten year investment into the stock back in 2012.

Start date: 11/09/2012


End date: 11/08/2022
Start price/share: $46.99
End price/share: $251.00
Starting shares: 212.81
Ending shares: 230.61
Dividends reinvested/share: $10.13
Total return: 478.83%
Average annual return: 19.19%
Starting investment: $10,000.00
Ending investment: $57,890.47

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 19.19%. This would have turned a $10K investment made 10 years ago into $57,890.47 today (as of 11/08/2022). On a total return basis, that’s a result of 478.83% (something to think about: how might DG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Dollar General Corp paid investors a total of $10.13/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 2.2/share, we calculate that DG has a current yield of approximately 0.88%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.2 against the original $46.99/share purchase price. This works out to a yield on cost of 1.87%.

More investment wisdom to ponder:
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” — Benjamin Graham