“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 Lincoln National Corp. (NYSE: LNC)? Today, we examine the outcome of a decade-long investment into the stock back in 2013.
|Average annual return:||-2.52%|
The above analysis shows the decade-long investment result worked out poorly, with an annualized rate of return of -2.52%. This would have turned a $10K investment made 10 years ago into $7,747.93 today (as of 05/19/2023). On a total return basis, that’s a result of -22.55% (something to think about: how might LNC shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Lincoln National Corp. paid investors a total of $12.62/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 1.8/share, we calculate that LNC has a current yield of approximately 8.59%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.8 against the original $34.90/share purchase price. This works out to a yield on cost of 24.61%.
Another great investment quote to think about:
“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.” — Warren Buffett