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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 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
$10,000

06/24/2013
  $14,065

06/22/2023
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