“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 Campbell Soup Co (NYSE: CPB)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 06/24/2013 |
|
|||
| End date: | 06/22/2023 | ||||
| Start price/share: | $43.60 | ||||
| End price/share: | $45.78 | ||||
| Starting shares: | 229.36 | ||||
| Ending shares: | 307.23 | ||||
| Dividends reinvested/share: | $13.68 | ||||
| Total return: | 40.65% | ||||
| Average annual return: | 3.47% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,065.15 | ||||
As we can see, the ten year investment result worked out as follows, with an annualized rate of return of 3.47%. This would have turned a $10K investment made 10 years ago into $14,065.15 today (as of 06/22/2023). On a total return basis, that’s a result of 40.65% (something to think about: how might CPB shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Campbell Soup Co paid investors a total of $13.68/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 1.48/share, we calculate that CPB has a current yield of approximately 3.23%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.48 against the original $43.60/share purchase price. This works out to a yield on cost of 7.41%.
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
