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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 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


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