“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 Comerica, Inc. (NYSE: CMA)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 05/14/2014 |
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| End date: | 05/13/2024 | ||||
| Start price/share: | $46.73 | ||||
| End price/share: | $53.19 | ||||
| Starting shares: | 214.00 | ||||
| Ending shares: | 299.76 | ||||
| Dividends reinvested/share: | $19.64 | ||||
| Total return: | 59.44% | ||||
| Average annual return: | 4.77% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,939.71 | ||||
As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 4.77%. This would have turned a $10K investment made 10 years ago into $15,939.71 today (as of 05/13/2024). On a total return basis, that’s a result of 59.44% (something to think about: how might CMA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Comerica, Inc. paid investors a total of $19.64/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 2.84/share, we calculate that CMA has a current yield of approximately 5.34%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.84 against the original $46.73/share purchase price. This works out to a yield on cost of 11.43%.
Here’s one more great investment quote before you go:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman
