“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 Alliant Energy Corp (NASD: LNT)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 05/31/2013 |
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| End date: | 05/30/2023 | ||||
| Start price/share: | $24.63 | ||||
| End price/share: | $51.01 | ||||
| Starting shares: | 406.01 | ||||
| Ending shares: | 557.92 | ||||
| Dividends reinvested/share: | $13.54 | ||||
| Total return: | 184.59% | ||||
| Average annual return: | 11.02% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,453.56 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 11.02%. This would have turned a $10K investment made 10 years ago into $28,453.56 today (as of 05/30/2023). On a total return basis, that’s a result of 184.59% (something to think about: how might LNT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Alliant Energy Corp paid investors a total of $13.54/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 1.81/share, we calculate that LNT has a current yield of approximately 3.55%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.81 against the original $24.63/share purchase price. This works out to a yield on cost of 14.41%.
Another great investment quote to think about:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham
