“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 Mosaic Co (NYSE: MOS)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
| Start date: | 06/29/2012 |
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| End date: | 06/28/2022 | ||||
| Start price/share: | $54.76 | ||||
| End price/share: | $49.28 | ||||
| Starting shares: | 182.62 | ||||
| Ending shares: | 217.86 | ||||
| Dividends reinvested/share: | $6.29 | ||||
| Total return: | 7.36% | ||||
| Average annual return: | 0.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,733.33 | ||||
The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 0.71%. This would have turned a $10K investment made 10 years ago into $10,733.33 today (as of 06/28/2022). On a total return basis, that’s a result of 7.36% (something to think about: how might MOS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Mosaic Co paid investors a total of $6.29/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 .6/share, we calculate that MOS has a current yield of approximately 1.22%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .6 against the original $54.76/share purchase price. This works out to a yield on cost of 2.23%.
More investment wisdom to ponder:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross
