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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 DENTSPLY SIRONA Inc (NASD: XRAY)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 07/15/2015


End date: 07/14/2020
Start price/share: $52.34
End price/share: $42.65
Starting shares: 191.06
Ending shares: 197.58
Dividends reinvested/share: $1.74
Total return: -15.73%
Average annual return: -3.36%
Starting investment: $10,000.00
Ending investment: $8,428.38

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -3.36%. This would have turned a $10K investment made 5 years ago into $8,428.38 today (as of 07/14/2020). On a total return basis, that’s a result of -15.73% (something to think about: how might XRAY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that DENTSPLY SIRONA Inc paid investors a total of $1.74/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 .4/share, we calculate that XRAY has a current yield of approximately 0.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .4 against the original $52.34/share purchase price. This works out to a yield on cost of 1.80%.

More investment wisdom to ponder:
“Ensure management’s interests are aligned with shareholders.” — Sam Zell