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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 J.M. Smucker Co. (NYSE: SJM)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 06/08/2015


End date: 06/05/2020
Start price/share: $110.48
End price/share: $107.44
Starting shares: 90.51
Ending shares: 103.45
Dividends reinvested/share: $15.72
Total return: 11.15%
Average annual return: 2.14%
Starting investment: $10,000.00
Ending investment: $11,116.14

The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 2.14%. This would have turned a $10K investment made 5 years ago into $11,116.14 today (as of 06/05/2020). On a total return basis, that’s a result of 11.15% (something to think about: how might SJM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that J.M. Smucker Co. paid investors a total of $15.72/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 3.52/share, we calculate that SJM has a current yield of approximately 3.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.52 against the original $110.48/share purchase price. This works out to a yield on cost of 2.97%.

One more investment quote to leave you with:
“Nearly every time I strayed from the herd, I’ve made a lot of money. Wandering away from the action is the way to find the new action.” — Jim Rogers