“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 Walmart Inc (NYSE: WMT)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
| Start date: | 11/01/2012 |
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| End date: | 10/31/2022 | ||||
| Start price/share: | $73.45 | ||||
| End price/share: | $142.33 | ||||
| Starting shares: | 136.15 | ||||
| Ending shares: | 170.27 | ||||
| Dividends reinvested/share: | $20.44 | ||||
| Total return: | 142.34% | ||||
| Average annual return: | 9.25% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $24,228.12 | ||||
As shown above, the ten year investment result worked out well, with an annualized rate of return of 9.25%. This would have turned a $10K investment made 10 years ago into $24,228.12 today (as of 10/31/2022). On a total return basis, that’s a result of 142.34% (something to think about: how might WMT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Walmart Inc paid investors a total of $20.44/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 2.24/share, we calculate that WMT has a current yield of approximately 1.57%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.24 against the original $73.45/share purchase price. This works out to a yield on cost of 2.14%.
Here’s one more great investment quote before you go:
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” — George Soros
