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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

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 “buy-and-hold” 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 ex-date 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