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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 SL Green Realty Corp (NYSE: SLG)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 07/27/2015


End date: 07/24/2020
Start price/share: $113.29
End price/share: $46.44
Starting shares: 88.27
Ending shares: 104.67
Dividends reinvested/share: $15.30
Total return: -51.39%
Average annual return: -13.44%
Starting investment: $10,000.00
Ending investment: $4,861.36

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -13.44%. This would have turned a $10K investment made 5 years ago into $4,861.36 today (as of 07/24/2020). On a total return basis, that’s a result of -51.39% (something to think about: how might SLG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that SL Green Realty Corp paid investors a total of $15.30/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 3.54/share, we calculate that SLG has a current yield of approximately 7.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.54 against the original $113.29/share purchase price. This works out to a yield on cost of 6.73%.

More investment wisdom to ponder:
“Don’t look for the needle in the haystack, just buy the haystack.” — John Bogle