“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a decadelong holding period possibly?
Suppose a “buyandhold” investor was considering an investment into Loews Corp. (NYSE: L) back in 2014: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full decadelong investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
Start date:  06/16/2014 


End date:  06/13/2024  
Start price/share:  $43.23  
End price/share:  $74.17  
Starting shares:  231.32  
Ending shares:  243.65  
Dividends reinvested/share:  $2.52  
Total return:  80.72%  
Average annual return:  6.10%  
Starting investment:  $10,000.00  
Ending investment:  $18,078.14 
The above analysis shows the decadelong investment result worked out well, with an annualized rate of return of 6.10%. This would have turned a $10K investment made 10 years ago into $18,078.14 today (as of 06/13/2024). On a total return basis, that’s a result of 80.72% (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 exdate 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 0.34%. 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 $43.23/share purchase price. This works out to a yield on cost of 0.79%.
Another great investment quote to think about:
“When the public is most frightened, only the strong are left, and that’s when the market is in the best possible hands.” — Victor Niederhoffer