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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Tractor Supply Co. (NASD: TSCO)? Today, we examine the outcome of a five year investment into the stock back in 2014.

Start date: 07/11/2014


End date: 07/10/2019
Start price/share: $60.35
End price/share: $109.32
Starting shares: 165.70
Ending shares: 176.58
Dividends reinvested/share: $4.91
Total return: 93.03%
Average annual return: 14.06%
Starting investment: $10,000.00
Ending investment: $19,304.87

The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 14.06%. This would have turned a $10K investment made 5 years ago into $19,304.87 today (as of 07/10/2019). On a total return basis, that’s a result of 93.03% (something to think about: how might TSCO shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Tractor Supply Co. paid investors a total of $4.91/share in dividends over the 5 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 1.4/share, we calculate that TSCO has a current yield of approximately 1.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.4 against the original $60.35/share purchase price. This works out to a yield on cost of 2.12%.

One more investment quote to leave you with:
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” — Benjamin Graham