“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 Newmont Corp (NYSE: NEM)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 07/25/2013 |
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| End date: | 07/24/2023 | ||||
| Start price/share: | $29.93 | ||||
| End price/share: | $43.23 | ||||
| Starting shares: | 334.11 | ||||
| Ending shares: | 412.91 | ||||
| Dividends reinvested/share: | $9.39 | ||||
| Total return: | 78.50% | ||||
| Average annual return: | 5.96% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,843.84 | ||||
The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 5.96%. This would have turned a $10K investment made 10 years ago into $17,843.84 today (as of 07/24/2023). On a total return basis, that’s a result of 78.50% (something to think about: how might NEM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Newmont Corp paid investors a total of $9.39/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 1.6/share, we calculate that NEM has a current yield of approximately 3.70%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.6 against the original $29.93/share purchase price. This works out to a yield on cost of 12.36%.
One more piece of investment wisdom to leave you with:
“The stock market is a device to transfer money from the impatient to the patient.” — Warren Buffett
