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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

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a decade-long holding period for an investor who was considering CenterPoint Energy, Inc (NYSE: CNP) back in 2014, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 03/03/2014


End date: 02/29/2024
Start price/share: $23.48
End price/share: $27.50
Starting shares: 425.89
Ending shares: 614.85
Dividends reinvested/share: $9.13
Total return: 69.08%
Average annual return: 5.39%
Starting investment: $10,000.00
Ending investment: $16,904.18

As shown above, the decade-long investment result worked out well, with an annualized rate of return of 5.39%. This would have turned a $10K investment made 10 years ago into $16,904.18 today (as of 02/29/2024). On a total return basis, that’s a result of 69.08% (something to think about: how might CNP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that CenterPoint Energy, Inc paid investors a total of $9.13/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 .8/share, we calculate that CNP has a current yield of approximately 2.91%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $23.48/share purchase price. This works out to a yield on cost of 12.39%.

Here’s one more great investment quote before you go:
“It’s not how much money you make, but how much money you keep.” — Robert Kiyosaki