Photo credit:

“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 Allstate Corp (NYSE: ALL)? Today, we examine the outcome of a five year investment into the stock back in 2014.

Start date: 10/15/2014


End date: 10/14/2019
Start price/share: $60.57
End price/share: $108.23
Starting shares: 165.10
Ending shares: 181.28
Dividends reinvested/share: $7.62
Total return: 96.20%
Average annual return: 14.43%
Starting investment: $10,000.00
Ending investment: $19,620.02

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 14.43%. This would have turned a $10K investment made 5 years ago into $19,620.02 today (as of 10/14/2019). On a total return basis, that’s a result of 96.20% (something to think about: how might ALL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Allstate Corp paid investors a total of $7.62/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 2/share, we calculate that ALL has a current yield of approximately 1.85%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2 against the original $60.57/share purchase price. This works out to a yield on cost of 3.05%.

Here’s one more great investment quote before you go:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham