“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 Loews Corp. (NYSE: L)? Today, we examine the outcome of a ten year investment into the stock back in 2014.
| Start date: | 05/16/2014 |
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| End date: | 05/15/2024 | ||||
| Start price/share: | $42.55 | ||||
| End price/share: | $76.62 | ||||
| Starting shares: | 235.02 | ||||
| Ending shares: | 247.70 | ||||
| Dividends reinvested/share: | $2.52 | ||||
| Total return: | 89.79% | ||||
| Average annual return: | 6.61% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $18,972.81 | ||||
As we can see, the ten year investment result worked out well, with an annualized rate of return of 6.61%. This would have turned a $10K investment made 10 years ago into $18,972.81 today (as of 05/15/2024). On a total return basis, that’s a result of 89.79% (something to think about: how might L shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Loews Corp. paid investors a total of $2.52/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 .25/share, we calculate that L has a current yield of approximately 0.33%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .25 against the original $42.55/share purchase price. This works out to a yield on cost of 0.78%.
Here’s one more great investment quote before you go:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch
