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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 Stryker Corp (NYSE: SYK)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 01/29/2015


End date: 01/28/2020
Start price/share: $93.68
End price/share: $214.20
Starting shares: 106.75
Ending shares: 113.69
Dividends reinvested/share: $8.79
Total return: 143.53%
Average annual return: 19.48%
Starting investment: $10,000.00
Ending investment: $24,348.72

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 19.48%. This would have turned a $10K investment made 5 years ago into $24,348.72 today (as of 01/28/2020). On a total return basis, that’s a result of 143.53% (something to think about: how might SYK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Stryker Corp paid investors a total of $8.79/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 2.3/share, we calculate that SYK has a current yield of approximately 1.07%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.3 against the original $93.68/share purchase price. This works out to a yield on cost of 1.14%.

Another great investment quote to think about:
“Sometimes buying early on the way down looks like being wrong, but it isn’t.” — Seth Klarman