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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

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Williams Cos Inc (NYSE: WMB)? Today, we examine the outcome of a ten year investment into the stock back in 2014.

Start date: 09/26/2014
$10,000

09/26/2014
  $14,692

09/25/2024
End date: 09/25/2024
Start price/share: $56.51
End price/share: $45.50
Starting shares: 176.96
Ending shares: 323.04
Dividends reinvested/share: $16.94
Total return: 46.99%
Average annual return: 3.92%
Starting investment: $10,000.00
Ending investment: $14,692.07

As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 3.92%. This would have turned a $10K investment made 10 years ago into $14,692.07 today (as of 09/25/2024). On a total return basis, that’s a result of 46.99% (something to think about: how might WMB shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Williams Cos Inc paid investors a total of $16.94/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 1.9/share, we calculate that WMB has a current yield of approximately 4.18%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.9 against the original $56.51/share purchase price. This works out to a yield on cost of 7.40%.

One more investment quote to leave you with:
“Anyone who is not investing now is missing a tremendous opportunity.” — Carlos Slim