Photo credit:

“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 Walgreens Boots Alliance Inc (NASD: WBA)? Today, we examine the outcome of a ten year investment into the stock back in 2013.

Start date: 11/08/2013


End date: 11/07/2023
Start price/share: $59.70
End price/share: $21.65
Starting shares: 167.50
Ending shares: 227.72
Dividends reinvested/share: $16.61
Total return: -50.70%
Average annual return: -6.83%
Starting investment: $10,000.00
Ending investment: $4,928.07

As shown above, the ten year investment result worked out poorly, with an annualized rate of return of -6.83%. This would have turned a $10K investment made 10 years ago into $4,928.07 today (as of 11/07/2023). On a total return basis, that’s a result of -50.70% (something to think about: how might WBA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Walgreens Boots Alliance Inc paid investors a total of $16.61/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 1.92/share, we calculate that WBA has a current yield of approximately 8.87%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.92 against the original $59.70/share purchase price. This works out to a yield on cost of 14.86%.

More investment wisdom to ponder:
“When you sell in desperation, you always sell cheap.” — Peter Lynch