“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 Johnson & Johnson (NYSE: JNJ)? Today, we examine the outcome of a decade-long investment into the stock back in 2013.
|Average annual return:||10.37%|
As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 10.37%. This would have turned a $10K investment made 10 years ago into $26,830.44 today (as of 02/27/2023). On a total return basis, that’s a result of 168.20% (something to think about: how might JNJ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Always an important consideration with a dividend-paying company is: should we reinvest our dividends?Over the past 10 years, Johnson & Johnson has paid $35.20/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock (for the above calculations, the reinvestment is performed using closing price on ex-div date for that dividend).
Based upon the most recent annualized dividend rate of 4.52/share, we calculate that JNJ has a current yield of approximately 2.90%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.52 against the original $76.11/share purchase price. This works out to a yield on cost of 3.81%.
Another great investment quote to think about:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham