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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 Colgate-Palmolive Co. (NYSE: CL)? Today, we examine the outcome of a ten year investment into the stock back in 2013.

Start date: 03/07/2013


End date: 03/06/2023
Start price/share: $57.71
End price/share: $73.29
Starting shares: 173.28
Ending shares: 218.19
Dividends reinvested/share: $16.32
Total return: 59.91%
Average annual return: 4.80%
Starting investment: $10,000.00
Ending investment: $15,983.38

The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 4.80%. This would have turned a $10K investment made 10 years ago into $15,983.38 today (as of 03/06/2023). On a total return basis, that’s a result of 59.91% (something to think about: how might CL shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Colgate-Palmolive Co. paid investors a total of $16.32/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 1.88/share, we calculate that CL 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 1.88 against the original $57.71/share purchase price. This works out to a yield on cost of 4.45%.

More investment wisdom to ponder:
“Value investing is at its core the marriage of a contrarian streak and a calculator.” — Seth Klarman