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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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Baxter International Inc (NYSE: BAX)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.

Start date: 03/12/2014


End date: 03/11/2024
Start price/share: $36.73
End price/share: $43.48
Starting shares: 272.26
Ending shares: 321.00
Dividends reinvested/share: $8.98
Total return: 39.57%
Average annual return: 3.39%
Starting investment: $10,000.00
Ending investment: $13,959.33

As we can see, the decade-long investment result worked out as follows, with an annualized rate of return of 3.39%. This would have turned a $10K investment made 10 years ago into $13,959.33 today (as of 03/11/2024). On a total return basis, that’s a result of 39.57% (something to think about: how might BAX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Baxter International Inc paid investors a total of $8.98/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 1.16/share, we calculate that BAX has a current yield of approximately 2.67%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.16 against the original $36.73/share purchase price. This works out to a yield on cost of 7.27%.

Another great investment quote to think about:
“When everyone is going right, look left.” — Sam Zell