“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 Mosaic Co (NYSE: MOS)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 07/17/2014 |
|
|||
| End date: | 07/16/2024 | ||||
| Start price/share: | $47.55 | ||||
| End price/share: | $29.78 | ||||
| Starting shares: | 210.30 | ||||
| Ending shares: | 252.73 | ||||
| Dividends reinvested/share: | $6.06 | ||||
| Total return: | -24.74% | ||||
| Average annual return: | -2.80% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $7,526.53 | ||||
As we can see, the decade-long investment result worked out poorly, with an annualized rate of return of -2.80%. This would have turned a $10K investment made 10 years ago into $7,526.53 today (as of 07/16/2024). On a total return basis, that’s a result of -24.74% (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 $6.06/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 .84/share, we calculate that MOS has a current yield of approximately 2.82%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .84 against the original $47.55/share purchase price. This works out to a yield on cost of 5.93%.
One more piece of investment wisdom to leave you with:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman
