“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 International Paper Co (NYSE: IP)? Today, we examine the outcome of a decade-long investment into the stock back in 2015.
| Start date: | 02/10/2015 |
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| End date: | 02/07/2025 | ||||
| Start price/share: | $52.60 | ||||
| End price/share: | $56.07 | ||||
| Starting shares: | 190.11 | ||||
| Ending shares: | 289.58 | ||||
| Dividends reinvested/share: | $18.16 | ||||
| Total return: | 62.37% | ||||
| Average annual return: | 4.97% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,242.47 | ||||
The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 4.97%. This would have turned a $10K investment made 10 years ago into $16,242.47 today (as of 02/07/2025). On a total return basis, that’s a result of 62.37% (something to think about: how might IP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that International Paper Co paid investors a total of $18.16/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 1.85/share, we calculate that IP has a current yield of approximately 3.30%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.85 against the original $52.60/share purchase price. This works out to a yield on cost of 6.27%.
More investment wisdom to ponder:
“The most important thing about an investment philosophy is that you have one.” — David Booth
