“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 Robert Half International Inc. (NYSE: RHI)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.
| Start date: | 09/06/2012 |
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| End date: | 09/02/2022 | ||||
| Start price/share: | $27.06 | ||||
| End price/share: | $76.06 | ||||
| Starting shares: | 369.55 | ||||
| Ending shares: | 445.73 | ||||
| Dividends reinvested/share: | $10.68 | ||||
| Total return: | 239.02% | ||||
| Average annual return: | 12.99% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $33,892.96 | ||||
As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 12.99%. This would have turned a $10K investment made 10 years ago into $33,892.96 today (as of 09/02/2022). On a total return basis, that’s a result of 239.02% (something to think about: how might RHI shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Robert Half International Inc. paid investors a total of $10.68/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 1.72/share, we calculate that RHI has a current yield of approximately 2.26%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.72 against the original $27.06/share purchase price. This works out to a yield on cost of 8.35%.
More investment wisdom to ponder:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell
