“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade 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 two-decade investment into the stock back in 2004.
| Start date: | 10/26/2004 |
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| End date: | 10/16/2024 | ||||
| Start price/share: | $15.16 | ||||
| End price/share: | $26.06 | ||||
| Starting shares: | 659.63 | ||||
| Ending shares: | 865.34 | ||||
| Dividends reinvested/share: | $10.44 | ||||
| Total return: | 125.51% | ||||
| Average annual return: | 4.15% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $22,539.46 | ||||
As shown above, the two-decade investment result worked out as follows, with an annualized rate of return of 4.15%. This would have turned a $10K investment made 20 years ago into $22,539.46 today (as of 10/16/2024). On a total return basis, that’s a result of 125.51% (something to think about: how might MOS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Mosaic Co paid investors a total of $10.44/share in dividends over the 20 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 3.22%. 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 $15.16/share purchase price. This works out to a yield on cost of 21.24%.
Here’s one more great investment quote before you go:
“Never is there a better time to buy a stock than when a basically sound company, for whatever reason, temporarily falls out of favor with the investment community.” — Geraldine Weiss
