“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 Mondelez International Inc (NASD: MDLZ)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 12/11/2013 |
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| End date: | 12/08/2023 | ||||
| Start price/share: | $34.08 | ||||
| End price/share: | $71.09 | ||||
| Starting shares: | 293.43 | ||||
| Ending shares: | 358.35 | ||||
| Dividends reinvested/share: | $10.15 | ||||
| Total return: | 154.75% | ||||
| Average annual return: | 9.80% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $25,463.15 | ||||
The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 9.80%. This would have turned a $10K investment made 10 years ago into $25,463.15 today (as of 12/08/2023). On a total return basis, that’s a result of 154.75% (something to think about: how might MDLZ shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Mondelez International Inc paid investors a total of $10.15/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 1.7/share, we calculate that MDLZ has a current yield of approximately 2.39%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.7 against the original $34.08/share purchase price. This works out to a yield on cost of 7.01%.
Here’s one more great investment quote before you go:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham
