“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 Stanley Black & Decker Inc (NYSE: SWK)? Today, we examine the outcome of a decade-long investment into the stock back in 2014.
| Start date: | 08/04/2014 |
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| End date: | 08/01/2024 | ||||
| Start price/share: | $87.95 | ||||
| End price/share: | $101.50 | ||||
| Starting shares: | 113.70 | ||||
| Ending shares: | 142.68 | ||||
| Dividends reinvested/share: | $26.92 | ||||
| Total return: | 44.82% | ||||
| Average annual return: | 3.77% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,478.32 | ||||
The above analysis shows the decade-long investment result worked out as follows, with an annualized rate of return of 3.77%. This would have turned a $10K investment made 10 years ago into $14,478.32 today (as of 08/01/2024). On a total return basis, that’s a result of 44.82% (something to think about: how might SWK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Stanley Black & Decker Inc paid investors a total of $26.92/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 3.28/share, we calculate that SWK has a current yield of approximately 3.23%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.28 against the original $87.95/share purchase price. This works out to a yield on cost of 3.67%.
Here’s one more great investment quote before you go:
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.” — Seth Klarman
