“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 DTE Energy Co (NYSE: DTE)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 07/22/2014 |
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| End date: | 07/19/2024 | ||||
| Start price/share: | $64.76 | ||||
| End price/share: | $116.09 | ||||
| Starting shares: | 154.42 | ||||
| Ending shares: | 215.53 | ||||
| Dividends reinvested/share: | $31.98 | ||||
| Total return: | 150.21% | ||||
| Average annual return: | 9.60% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $25,009.53 | ||||
The above analysis shows the decade-long investment result worked out well, with an annualized rate of return of 9.60%. This would have turned a $10K investment made 10 years ago into $25,009.53 today (as of 07/19/2024). On a total return basis, that’s a result of 150.21% (something to think about: how might DTE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that DTE Energy Co paid investors a total of $31.98/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 4.08/share, we calculate that DTE has a current yield of approximately 3.51%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.08 against the original $64.76/share purchase price. This works out to a yield on cost of 5.42%.
Here’s one more great investment quote before you go:
“An investment in knowledge pays the best interest.” — Benjamin Franklin
