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 PG&E Corp (NYSE: PCG)? Today, we examine the outcome of a ten year investment into the stock back in 2014.

Start date: 02/14/2014


End date: 02/13/2024
Start price/share: $43.94
End price/share: $16.29
Starting shares: 227.58
Ending shares: 258.77
Dividends reinvested/share: $7.13
Total return: -57.85%
Average annual return: -8.27%
Starting investment: $10,000.00
Ending investment: $4,217.07

As shown above, the ten year investment result worked out poorly, with an annualized rate of return of -8.27%. This would have turned a $10K investment made 10 years ago into $4,217.07 today (as of 02/13/2024). On a total return basis, that’s a result of -57.85% (something to think about: how might PCG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that PG&E Corp paid investors a total of $7.13/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 .04/share, we calculate that PCG has a current yield of approximately 0.25%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .04 against the original $43.94/share purchase price. This works out to a yield on cost of 0.57%.

One more piece of investment wisdom to leave you with:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett