“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 Loews Corp. (NYSE: L)? Today, we examine the outcome of a decade-long investment into the stock back in 2013.
| Start date: | 04/24/2013 |
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| End date: | 04/21/2023 | ||||
| Start price/share: | $44.51 | ||||
| End price/share: | $56.44 | ||||
| Starting shares: | 224.67 | ||||
| Ending shares: | 237.18 | ||||
| Dividends reinvested/share: | $2.52 | ||||
| Total return: | 33.87% | ||||
| Average annual return: | 2.96% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $13,385.99 | ||||
As shown above, the decade-long investment result worked out as follows, with an annualized rate of return of 2.96%. This would have turned a $10K investment made 10 years ago into $13,385.99 today (as of 04/21/2023). On a total return basis, that’s a result of 33.87% (something to think about: how might L shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Loews Corp. paid investors a total of $2.52/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 .25/share, we calculate that L has a current yield of approximately 0.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .25 against the original $44.51/share purchase price. This works out to a yield on cost of 0.99%.
One more investment quote to leave you with:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross
