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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 wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a decade-long holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Corning Inc (NYSE: GLW) back in 2012. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 12/14/2012


End date: 12/13/2022
Start price/share: $12.62
End price/share: $33.99
Starting shares: 792.39
Ending shares: 1,020.94
Dividends reinvested/share: $6.87
Total return: 247.02%
Average annual return: 13.25%
Starting investment: $10,000.00
Ending investment: $34,716.04

As we can see, the decade-long investment result worked out quite well, with an annualized rate of return of 13.25%. This would have turned a $10K investment made 10 years ago into $34,716.04 today (as of 12/13/2022). On a total return basis, that’s a result of 247.02% (something to think about: how might GLW shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Corning Inc paid investors a total of $6.87/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 1.08/share, we calculate that GLW has a current yield of approximately 3.18%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.08 against the original $12.62/share purchase price. This works out to a yield on cost of 25.20%.

Here’s one more great investment quote before you go:
“Money is better than poverty, if only for financial reasons.” — Woody Allen