“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 Assurant Inc (NYSE: AIZ)? Today, we examine the outcome of a decade-long investment into the stock back in 2013.
| Start date: | 01/09/2013 |
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| End date: | 01/06/2023 | ||||
| Start price/share: | $35.44 | ||||
| End price/share: | $128.59 | ||||
| Starting shares: | 282.17 | ||||
| Ending shares: | 343.34 | ||||
| Dividends reinvested/share: | $19.55 | ||||
| Total return: | 341.50% | ||||
| Average annual return: | 16.01% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $44,134.43 | ||||
As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 16.01%. This would have turned a $10K investment made 10 years ago into $44,134.43 today (as of 01/06/2023). On a total return basis, that’s a result of 341.50% (something to think about: how might AIZ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Assurant Inc paid investors a total of $19.55/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 2.8/share, we calculate that AIZ has a current yield of approximately 2.18%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.8 against the original $35.44/share purchase price. This works out to a yield on cost of 6.15%.
Another great investment quote to think about:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch
