“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 Textron Inc (NYSE: TXT)? Today, we examine the outcome of a ten year investment into the stock back in 2015.
| Start date: | 03/18/2015 |
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| End date: | 03/17/2025 | ||||
| Start price/share: | $44.65 | ||||
| End price/share: | $74.62 | ||||
| Starting shares: | 223.96 | ||||
| Ending shares: | 227.35 | ||||
| Dividends reinvested/share: | $0.80 | ||||
| Total return: | 69.65% | ||||
| Average annual return: | 5.42% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,957.26 | ||||
As shown above, the ten year investment result worked out well, with an annualized rate of return of 5.42%. This would have turned a $10K investment made 10 years ago into $16,957.26 today (as of 03/17/2025). On a total return basis, that’s a result of 69.65% (something to think about: how might TXT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Textron Inc paid investors a total of $0.80/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 .08/share, we calculate that TXT has a current yield of approximately 0.11%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .08 against the original $44.65/share purchase price. This works out to a yield on cost of 0.25%.
One more investment quote to leave you with:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis
