“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 Comerica, Inc. (NYSE: CMA)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 04/01/2013 |
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| End date: | 03/28/2023 | ||||
| Start price/share: | $35.28 | ||||
| End price/share: | $42.76 | ||||
| Starting shares: | 283.45 | ||||
| Ending shares: | 380.15 | ||||
| Dividends reinvested/share: | $17.50 | ||||
| Total return: | 62.55% | ||||
| Average annual return: | 4.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,253.62 | ||||
The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 4.98%. This would have turned a $10K investment made 10 years ago into $16,253.62 today (as of 03/28/2023). On a total return basis, that’s a result of 62.55% (something to think about: how might CMA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Comerica, Inc. paid investors a total of $17.50/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 2.84/share, we calculate that CMA has a current yield of approximately 6.64%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.84 against the original $35.28/share purchase price. This works out to a yield on cost of 18.82%.
One more piece of investment wisdom 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
