Photo credit:

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?

Today, let’s look backwards in time to 2014, and take a look at what happened to investors who asked that very question about Zoetis Inc (NYSE: ZTS), by taking a look at the investment outcome over a ten year holding period.

Start date: 06/23/2014


End date: 06/20/2024
Start price/share: $32.64
End price/share: $168.18
Starting shares: 306.37
Ending shares: 328.58
Dividends reinvested/share: $7.58
Total return: 452.60%
Average annual return: 18.64%
Starting investment: $10,000.00
Ending investment: $55,247.34

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 18.64%. This would have turned a $10K investment made 10 years ago into $55,247.34 today (as of 06/20/2024). On a total return basis, that’s a result of 452.60% (something to think about: how might ZTS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Zoetis Inc paid investors a total of $7.58/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 1.728/share, we calculate that ZTS has a current yield of approximately 1.03%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.728 against the original $32.64/share purchase price. This works out to a yield on cost of 3.16%.

More investment wisdom to ponder:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain