Photo credit: commons.wikimedia.org

“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 Mosaic Co (NYSE: MOS)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.

Start date: 07/17/2014
$10,000

07/17/2014
  $7,526

07/16/2024
End date: 07/16/2024
Start price/share: $47.55
End price/share: $29.78
Starting shares: 210.30
Ending shares: 252.73
Dividends reinvested/share: $6.06
Total return: -24.74%
Average annual return: -2.80%
Starting investment: $10,000.00
Ending investment: $7,526.53

As we can see, the decade-long investment result worked out poorly, with an annualized rate of return of -2.80%. This would have turned a $10K investment made 10 years ago into $7,526.53 today (as of 07/16/2024). On a total return basis, that’s a result of -24.74% (something to think about: how might MOS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Mosaic Co paid investors a total of $6.06/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 .84/share, we calculate that MOS has a current yield of approximately 2.82%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .84 against the original $47.55/share purchase price. This works out to a yield on cost of 5.93%.

One more piece of investment wisdom to leave you with:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman