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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

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a decade-long holding period for an investor who was considering Intel Corp (NASD: INTC) back in 2012, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 11/12/2012


End date: 11/10/2022
Start price/share: $20.77
End price/share: $29.76
Starting shares: 481.46
Ending shares: 648.89
Dividends reinvested/share: $11.51
Total return: 93.11%
Average annual return: 6.80%
Starting investment: $10,000.00
Ending investment: $19,306.90

As we can see, the decade-long investment result worked out well, with an annualized rate of return of 6.80%. This would have turned a $10K investment made 10 years ago into $19,306.90 today (as of 11/10/2022). On a total return basis, that’s a result of 93.11% (something to think about: how might INTC shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Intel Corp paid investors a total of $11.51/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 1.46/share, we calculate that INTC has a current yield of approximately 4.91%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.46 against the original $20.77/share purchase price. This works out to a yield on cost of 23.64%.

Another great investment quote to think about:
“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.” — Charlie Munger