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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 Hartford Financial Services Group Inc. (NYSE: HIG)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 07/13/2015


End date: 07/10/2020
Start price/share: $45.10
End price/share: $37.41
Starting shares: 221.73
Ending shares: 246.39
Dividends reinvested/share: $5.17
Total return: -7.83%
Average annual return: -1.62%
Starting investment: $10,000.00
Ending investment: $9,216.23

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -1.62%. This would have turned a $10K investment made 5 years ago into $9,216.23 today (as of 07/10/2020). On a total return basis, that’s a result of -7.83% (something to think about: how might HIG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Hartford Financial Services Group Inc. paid investors a total of $5.17/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 1.3/share, we calculate that HIG has a current yield of approximately 3.48%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.3 against the original $45.10/share purchase price. This works out to a yield on cost of 7.72%.

One more investment quote to leave you with:
“Ensure management’s interests are aligned with shareholders.” — Sam Zell