“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 longterm 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 exdate 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