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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 Tyson Foods Inc (NYSE: TSN) back in 2013, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 02/11/2013
$10,000

02/11/2013
  $29,904

02/08/2023
End date: 02/08/2023
Start price/share: $23.64
End price/share: $59.98
Starting shares: 423.01
Ending shares: 498.55
Dividends reinvested/share: $10.83
Total return: 199.03%
Average annual return: 11.58%
Starting investment: $10,000.00
Ending investment: $29,904.27

The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 11.58%. This would have turned a $10K investment made 10 years ago into $29,904.27 today (as of 02/08/2023). On a total return basis, that’s a result of 199.03% (something to think about: how might TSN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Tyson Foods Inc paid investors a total of $10.83/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 1.92/share, we calculate that TSN has a current yield of approximately 3.20%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.92 against the original $23.64/share purchase price. This works out to a yield on cost of 13.54%.

More investment wisdom to ponder:
“The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.” — T. Boone Pickens