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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 investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a decade-long holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Intercontinental Exchange Inc (NYSE: ICE) back in 2014, holding through to today.

Start date: 04/07/2014


End date: 04/04/2024
Start price/share: $38.45
End price/share: $136.70
Starting shares: 260.08
Ending shares: 295.95
Dividends reinvested/share: $10.68
Total return: 304.56%
Average annual return: 15.00%
Starting investment: $10,000.00
Ending investment: $40,455.58

As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 15.00%. This would have turned a $10K investment made 10 years ago into $40,455.58 today (as of 04/04/2024). On a total return basis, that’s a result of 304.56% (something to think about: how might ICE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Beyond share price change, another component of ICE’s total return these past 10 years has been the payment by Intercontinental Exchange Inc of $10.68/share in dividends to shareholders. Automatic reinvestment of dividends can be a wonderful way to compound returns, and for the above calculations we presume that dividends are reinvested into additional shares of stock. (For the purpose of these calcuations, the closing price on ex-date is used).

Based upon the most recent annualized dividend rate of 1.8/share, we calculate that ICE has a current yield of approximately 1.32%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.8 against the original $38.45/share purchase price. This works out to a yield on cost of 3.43%.

More investment wisdom to ponder:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt