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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

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a decade-long holding period for an investor who was considering WEC Energy Group Inc (NYSE: WEC) back in 2014, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 07/09/2014
$10,000

07/09/2014
  $23,859

07/08/2024
End date: 07/08/2024
Start price/share: $45.22
End price/share: $78.05
Starting shares: 221.14
Ending shares: 305.73
Dividends reinvested/share: $24.10
Total return: 138.62%
Average annual return: 9.08%
Starting investment: $10,000.00
Ending investment: $23,859.32

The above analysis shows the decade-long investment result worked out well, with an annualized rate of return of 9.08%. This would have turned a $10K investment made 10 years ago into $23,859.32 today (as of 07/08/2024). On a total return basis, that’s a result of 138.62% (something to think about: how might WEC shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that WEC Energy Group Inc paid investors a total of $24.10/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 3.34/share, we calculate that WEC has a current yield of approximately 4.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.34 against the original $45.22/share purchase price. This works out to a yield on cost of 9.46%.

Here’s one more great investment quote before you go:
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” — George Soros