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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 Hormel Foods Corp. (NYSE: HRL)? Today, we examine the outcome of a ten year investment into the stock back in 2014.

Start date: 03/05/2014


End date: 03/04/2024
Start price/share: $23.93
End price/share: $33.77
Starting shares: 417.89
Ending shares: 513.26
Dividends reinvested/share: $7.99
Total return: 73.33%
Average annual return: 5.65%
Starting investment: $10,000.00
Ending investment: $17,331.09

As we can see, the ten year investment result worked out well, with an annualized rate of return of 5.65%. This would have turned a $10K investment made 10 years ago into $17,331.09 today (as of 03/04/2024). On a total return basis, that’s a result of 73.33% (something to think about: how might HRL shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Hormel Foods Corp. paid investors a total of $7.99/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 1.13/share, we calculate that HRL has a current yield of approximately 3.35%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.13 against the original $23.93/share purchase price. This works out to a yield on cost of 14.00%.

Here’s one more great investment quote before you go:
“In the end, how your investments behave is much less important than how you behave.” — Benjamin Graham