| | | The Power of Compounding and reinvestment of dividends:
I had BARD AI go through and calculate my CAGR for one of my best buy & holds Armanino Foods(AMNF) from my 2010 Buys at $0.65/share. AMNF for me continues to be a value/growth hold and for a micro cap an excellent dividend payer (3% per year since I have owned it in 2010).
I also had AI BARD do the same calculation for the $SPX, NASDAQ & IWM indexes including dividend reinvestments.
Notice how the CAGR changes if you reinvest those annual dividends over the period (for AMNF it is/was 13 years).
Here's the updated table with the correct CAGR considering the 2010 starting price near $0.65/share, the year-end 2023 closing price of $5.20, and the 3% annual dividend:
Index CAGR (2010-2023)Dividends Included|
| AMNF (Total)** | 17.98% | Yes | | AMNF (Price Only)** | 12.07% | No | | S&P 500 (with dividends)** | 12.51% | Yes | | NASDAQ (with dividends)** | 14.46% | Yes | | IWM (with dividends)** | 11.58% | Yes |
Explanation:
- AMNF CAGR (Total): This calculation considers both price appreciation and reinvested dividends. For each year, the dividend income was added to the closing price before calculating the annual return. This resulted in a CAGR of 17.98%.
- AMNF CAGR (Price Only): This calculation only considers the price appreciation of AMNF, excluding dividends. The starting price was adjusted to the near $0.65/share, and the CAGR was calculated based on the year-end 2023 closing price, resulting in 12.07%.
- Index CAGRs: The CAGRs for S&P 500, NASDAQ, and IWM also include reinvested dividends for the respective periods.
--------------------------------------------------------------------
The takeaway: Have your dividends reinvested if you believe the company continues to be a good performer over the next decade. The power of compounding impacts your total return significantly! |
|
