“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a ten year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Berkley Corp (NYSE: WRB) back in 2015: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 05/04/2015 |
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| End date: | 05/01/2025 | ||||
| Start price/share: | $14.58 | ||||
| End price/share: | $71.18 | ||||
| Starting shares: | 685.87 | ||||
| Ending shares: | 845.05 | ||||
| Dividends reinvested/share: | $6.84 | ||||
| Total return: | 501.50% | ||||
| Average annual return: | 19.65% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $60,134.96 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 19.65%. This would have turned a $10K investment made 10 years ago into $60,134.96 today (as of 05/01/2025). On a total return basis, that’s a result of 501.50% (something to think about: how might WRB shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Berkley Corp paid investors a total of $6.84/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 .32/share, we calculate that WRB has a current yield of approximately 0.45%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .32 against the original $14.58/share purchase price. This works out to a yield on cost of 3.09%.
More investment wisdom to ponder:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham
