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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 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 Lumen Technologies Inc (NYSE: LUMN)? Today, we examine the outcome of a decade-long investment into the stock back in 2013.

Start date: 02/27/2013


End date: 02/24/2023
Start price/share: $34.51
End price/share: $3.56
Starting shares: 289.77
Ending shares: 640.37
Dividends reinvested/share: $16.46
Total return: -77.20%
Average annual return: -13.75%
Starting investment: $10,000.00
Ending investment: $2,279.12

As shown above, the decade-long investment result worked out poorly, with an annualized rate of return of -13.75%. This would have turned a $10K investment made 10 years ago into $2,279.12 today (as of 02/24/2023). On a total return basis, that’s a result of -77.20% (something to think about: how might LUMN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Lumen Technologies Inc paid investors a total of $16.46/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/share, we calculate that LUMN has a current yield of approximately 28.09%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $34.51/share purchase price. This works out to a yield on cost of 81.40%.

One more investment quote to leave you with:
“The most important three words in investing is: “I don’t know.” If someone doesn’t say that to you then they are lying.” — James Altucher