“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 Intel Corp (NASD: INTC)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 07/12/2013 |
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| End date: | 07/11/2023 | ||||
| Start price/share: | $23.90 | ||||
| End price/share: | $33.30 | ||||
| Starting shares: | 418.41 | ||||
| Ending shares: | 562.06 | ||||
| Dividends reinvested/share: | $11.55 | ||||
| Total return: | 87.17% | ||||
| Average annual return: | 6.47% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $18,721.78 | ||||
As shown above, the ten year investment result worked out well, with an annualized rate of return of 6.47%. This would have turned a $10K investment made 10 years ago into $18,721.78 today (as of 07/11/2023). On a total return basis, that’s a result of 87.17% (something to think about: how might INTC shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Intel Corp paid investors a total of $11.55/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 INTC has a current yield of approximately 1.50%. 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 $23.90/share purchase price. This works out to a yield on cost of 6.28%.
Another great investment quote to think about:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil
