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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a ten year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Blackrock Inc (NYSE: BLK) back in 2013: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.

Start date: 04/29/2013
$10,000

04/29/2013
  $31,758

04/27/2023
End date: 04/27/2023
Start price/share: $268.21
End price/share: $662.68
Starting shares: 37.28
Ending shares: 47.92
Dividends reinvested/share: $121.42
Total return: 217.55%
Average annual return: 12.25%
Starting investment: $10,000.00
Ending investment: $31,758.76

As shown above, the ten year investment result worked out quite well, with an annualized rate of return of 12.25%. This would have turned a $10K investment made 10 years ago into $31,758.76 today (as of 04/27/2023). On a total return basis, that’s a result of 217.55% (something to think about: how might BLK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Blackrock Inc paid investors a total of $121.42/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 20/share, we calculate that BLK has a current yield of approximately 3.02%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 20 against the original $268.21/share purchase price. This works out to a yield on cost of 1.13%.

One more piece of investment wisdom to leave you with:
“Invest for the long haul. Don’t get too greedy and don’t get too scared.” — Shelby Davis