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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 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.

Start date: 05/22/2013


End date: 05/19/2023
Start price/share: $34.90
End price/share: $20.95
Starting shares: 286.53
Ending shares: 369.67
Dividends reinvested/share: $12.62
Total return: -22.55%
Average annual return: -2.52%
Starting investment: $10,000.00
Ending investment: $7,747.93

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