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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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Analog Devices Inc (NASD: ADI)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.

Start date: 06/17/2014


End date: 06/14/2024
Start price/share: $55.70
End price/share: $231.19
Starting shares: 179.53
Ending shares: 222.30
Dividends reinvested/share: $23.46
Total return: 413.94%
Average annual return: 17.79%
Starting investment: $10,000.00
Ending investment: $51,414.33

As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 17.79%. This would have turned a $10K investment made 10 years ago into $51,414.33 today (as of 06/14/2024). On a total return basis, that’s a result of 413.94% (something to think about: how might ADI shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Many investors out there refuse to own any stock that lacks a dividend; in the case of Analog Devices Inc, investors have received $23.46/share in dividends these past 10 years examined in the exercise above. This means total return was driven not just by share price, but also by the dividends received (and what the investor did with those dividends). For this exercise, what we’ve done with the dividends is to assume they are reinvestted — i.e. used to purchase additional shares (the calculations use closing price on ex-date).

Based upon the most recent annualized dividend rate of 3.68/share, we calculate that ADI has a current yield of approximately 1.59%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.68 against the original $55.70/share purchase price. This works out to a yield on cost of 2.85%.

One more investment quote to leave you with:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban