“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 JPMorgan Chase & Co (NYSE: JPM)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
| Start date: | 03/30/2012 |
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| End date: | 03/29/2022 | ||||
| Start price/share: | $45.98 | ||||
| End price/share: | $141.18 | ||||
| Starting shares: | 217.49 | ||||
| Ending shares: | 286.13 | ||||
| Dividends reinvested/share: | $23.46 | ||||
| Total return: | 303.96% | ||||
| Average annual return: | 14.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $40,400.72 | ||||
As we can see, the ten year investment result worked out quite well, with an annualized rate of return of 14.98%. This would have turned a $10K investment made 10 years ago into $40,400.72 today (as of 03/29/2022). On a total return basis, that’s a result of 303.96% (something to think about: how might JPM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that JPMorgan Chase & Co paid investors a total of $23.46/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 4/share, we calculate that JPM has a current yield of approximately 2.83%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4 against the original $45.98/share purchase price. This works out to a yield on cost of 6.15%.
Here’s one more great investment quote before you go:
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” — George Soros
