“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a ten year holding period possibly?
Suppose a “buyandhold” investor was considering an investment into Progressive Corp. (NYSE: PGR) back in 2013: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
Start date:  12/19/2013 


End date:  12/18/2023  
Start price/share:  $26.70  
End price/share:  $156.00  
Starting shares:  374.53  
Ending shares:  508.01  
Dividends reinvested/share:  $17.54  
Total return:  692.50%  
Average annual return:  22.99%  
Starting investment:  $10,000.00  
Ending investment:  $79,239.96 
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 22.99%. This would have turned a $10K investment made 10 years ago into $79,239.96 today (as of 12/18/2023). On a total return basis, that’s a result of 692.50% (something to think about: how might PGR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Progressive Corp. paid investors a total of $17.54/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 exdate is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 3.00/share, we calculate that PGR has a current yield of approximately 1.92%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.00 against the original $26.70/share purchase price. This works out to a yield on cost of 7.19%.
Another great investment quote to think about:
“He who earns and does not invest will have to work for the rest of his life.” — Debasish Mridha