“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a ten year holding period for an investor who was considering Applied Materials, Inc. (NASD: AMAT) back in 2015, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 05/22/2015 |
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| End date: | 05/21/2025 | ||||
| Start price/share: | $20.14 | ||||
| End price/share: | $162.23 | ||||
| Starting shares: | 496.52 | ||||
| Ending shares: | 559.76 | ||||
| Dividends reinvested/share: | $8.50 | ||||
| Total return: | 808.09% | ||||
| Average annual return: | 24.67% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $90,812.23 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 24.67%. This would have turned a $10K investment made 10 years ago into $90,812.23 today (as of 05/21/2025). On a total return basis, that’s a result of 808.09% (something to think about: how might AMAT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Applied Materials, Inc. paid investors a total of $8.50/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 1.84/share, we calculate that AMAT has a current yield of approximately 1.13%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.84 against the original $20.14/share purchase price. This works out to a yield on cost of 5.61%.
More investment wisdom to ponder:
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” — George Soros
