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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?

Today, let’s look backwards in time to 2013, and take a look at what happened to investors who asked that very question about Waste Management, Inc. (NYSE: WM), by taking a look at the investment outcome over a ten year holding period.

Start date: 11/07/2013


End date: 11/06/2023
Start price/share: $43.38
End price/share: $169.22
Starting shares: 230.52
Ending shares: 288.22
Dividends reinvested/share: $19.84
Total return: 387.73%
Average annual return: 17.17%
Starting investment: $10,000.00
Ending investment: $48,792.47

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.17%. This would have turned a $10K investment made 10 years ago into $48,792.47 today (as of 11/06/2023). On a total return basis, that’s a result of 387.73% (something to think about: how might WM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Waste Management, Inc. paid investors a total of $19.84/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 2.8/share, we calculate that WM has a current yield of approximately 1.65%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.8 against the original $43.38/share purchase price. This works out to a yield on cost of 3.80%.

Another great investment quote to think about:
“The best stock to buy is the one you already own.” — Peter Lynch