“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 Hershey Company (NYSE: HSY)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 12/16/2014 |
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| End date: | 12/13/2024 | ||||
| Start price/share: | $97.94 | ||||
| End price/share: | $183.10 | ||||
| Starting shares: | 102.10 | ||||
| Ending shares: | 128.50 | ||||
| Dividends reinvested/share: | $33.31 | ||||
| Total return: | 135.28% | ||||
| Average annual return: | 8.93% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $23,522.04 | ||||
As shown above, the decade-long investment result worked out well, with an annualized rate of return of 8.93%. This would have turned a $10K investment made 10 years ago into $23,522.04 today (as of 12/13/2024). On a total return basis, that’s a result of 135.28% (something to think about: how might HSY shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Hershey Company paid investors a total of $33.31/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 5.48/share, we calculate that HSY has a current yield of approximately 2.99%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.48 against the original $97.94/share purchase price. This works out to a yield on cost of 3.05%.
Another great investment quote to think about:
“All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” — Peter Lynch
