“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Comerica, Inc. (NYSE: CMA)? Today, we examine the outcome of a decade-long investment into the stock back in 2013.
| Start date: | 11/08/2013 |
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| End date: | 11/07/2023 | ||||
| Start price/share: | $45.20 | ||||
| End price/share: | $42.45 | ||||
| Starting shares: | 221.24 | ||||
| Ending shares: | 304.04 | ||||
| Dividends reinvested/share: | $18.58 | ||||
| Total return: | 29.07% | ||||
| Average annual return: | 2.58% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $12,902.01 | ||||
The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 2.58%. This would have turned a $10K investment made 10 years ago into $12,902.01 today (as of 11/07/2023). On a total return basis, that’s a result of 29.07% (something to think about: how might CMA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Comerica, Inc. paid investors a total of $18.58/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 2.84/share, we calculate that CMA has a current yield of approximately 6.69%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.84 against the original $45.20/share purchase price. This works out to a yield on cost of 14.80%.
Here’s one more great investment quote before you go:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
