“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 Hershey Company (NYSE: HSY)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 12/24/2012 |
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| End date: | 12/21/2022 | ||||
| Start price/share: | $73.01 | ||||
| End price/share: | $234.98 | ||||
| Starting shares: | 136.97 | ||||
| Ending shares: | 171.07 | ||||
| Dividends reinvested/share: | $27.22 | ||||
| Total return: | 301.98% | ||||
| Average annual return: | 14.93% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $40,194.67 | ||||
The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 14.93%. This would have turned a $10K investment made 10 years ago into $40,194.67 today (as of 12/21/2022). On a total return basis, that’s a result of 301.98% (something to think about: how might HSY shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Hershey Company paid investors a total of $27.22/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 4.144/share, we calculate that HSY has a current yield of approximately 1.76%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.144 against the original $73.01/share purchase price. This works out to a yield on cost of 2.41%.
Another great investment quote to think about:
“You’ve got to be careful if you don’t know where you’re going, ’cause you might not get there.” — Yogi Berra
