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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 Boeing Co. (NYSE: BA)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 05/14/2015


End date: 05/13/2020
Start price/share: $147.96
End price/share: $121.50
Starting shares: 67.59
Ending shares: 76.34
Dividends reinvested/share: $28.98
Total return: -7.24%
Average annual return: -1.49%
Starting investment: $10,000.00
Ending investment: $9,276.49

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -1.49%. This would have turned a $10K investment made 5 years ago into $9,276.49 today (as of 05/13/2020). On a total return basis, that’s a result of -7.24% (something to think about: how might BA shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Boeing Co. paid investors a total of $28.98/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 8.22/share, we calculate that BA has a current yield of approximately 6.77%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 8.22 against the original $147.96/share purchase price. This works out to a yield on cost of 4.58%.

One more investment quote to leave you with:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott