“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 CME Group (NASD: CME)? Today, we examine the outcome of a decade-long investment into the stock back in 2015.
| Start date: | 06/22/2015 |
|
|||
| End date: | 06/18/2025 | ||||
| Start price/share: | $94.67 | ||||
| End price/share: | $272.10 | ||||
| Starting shares: | 105.63 | ||||
| Ending shares: | 157.86 | ||||
| Dividends reinvested/share: | $69.54 | ||||
| Total return: | 329.53% | ||||
| Average annual return: | 15.70% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $42,969.48 | ||||
As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 15.70%. This would have turned a $10K investment made 10 years ago into $42,969.48 today (as of 06/18/2025). On a total return basis, that’s a result of 329.53% (something to think about: how might CME shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that CME Group paid investors a total of $69.54/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/share, we calculate that CME has a current yield of approximately 1.84%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5 against the original $94.67/share purchase price. This works out to a yield on cost of 1.94%.
One more piece of investment wisdom to leave you with:
“When you sell in desperation, you always sell cheap.” — Peter Lynch
