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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

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 Home Depot Inc (NYSE: HD)? Today, we examine the outcome of a ten year investment into the stock back in 2014.

Start date: 02/27/2014


End date: 02/26/2024
Start price/share: $81.97
End price/share: $371.60
Starting shares: 122.00
Ending shares: 153.68
Dividends reinvested/share: $48.68
Total return: 471.08%
Average annual return: 19.03%
Starting investment: $10,000.00
Ending investment: $57,117.82

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 19.03%. This would have turned a $10K investment made 10 years ago into $57,117.82 today (as of 02/26/2024). On a total return basis, that’s a result of 471.08% (something to think about: how might HD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Home Depot Inc paid investors a total of $48.68/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 9/share, we calculate that HD has a current yield of approximately 2.42%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 9 against the original $81.97/share purchase price. This works out to a yield on cost of 2.95%.

One more piece of investment wisdom to leave you with:
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger