“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?
A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a ten year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Brown & Brown Inc (NYSE: BRO) back in 2015. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:
| Start date: | 12/23/2015 |
|
|||
| End date: | 12/22/2025 | ||||
| Start price/share: | $16.04 | ||||
| End price/share: | $80.37 | ||||
| Starting shares: | 623.44 | ||||
| Ending shares: | 681.71 | ||||
| Dividends reinvested/share: | $3.94 | ||||
| Total return: | 447.89% | ||||
| Average annual return: | 18.53% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $54,788.24 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 18.53%. This would have turned a $10K investment made 10 years ago into $54,788.24 today (as of 12/22/2025). On a total return basis, that’s a result of 447.89% (something to think about: how might BRO shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Brown & Brown Inc paid investors a total of $3.94/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 .66/share, we calculate that BRO has a current yield of approximately 0.82%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .66 against the original $16.04/share purchase price. This works out to a yield on cost of 5.11%.
Here’s one more great investment quote before you go:
“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” — Peter Lynch
