“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Wells Fargo & Co (NYSE: WFC)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 02/28/2013 |
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| End date: | 02/27/2023 | ||||
| Start price/share: | $35.08 | ||||
| End price/share: | $46.78 | ||||
| Starting shares: | 285.06 | ||||
| Ending shares: | 379.42 | ||||
| Dividends reinvested/share: | $13.56 | ||||
| Total return: | 77.49% | ||||
| Average annual return: | 5.90% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,743.03 | ||||
As we can see, the ten year investment result worked out well, with an annualized rate of return of 5.90%. This would have turned a $10K investment made 10 years ago into $17,743.03 today (as of 02/27/2023). On a total return basis, that’s a result of 77.49% (something to think about: how might WFC shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Wells Fargo & Co paid investors a total of $13.56/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 1.2/share, we calculate that WFC has a current yield of approximately 2.57%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.2 against the original $35.08/share purchase price. This works out to a yield on cost of 7.33%.
Here’s one more great investment quote before you go:
“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” — John Bogle
WFC
