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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 MetLife Inc (NYSE: MET)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 07/29/2015


End date: 07/28/2020
Start price/share: $51.00
End price/share: $37.59
Starting shares: 196.08
Ending shares: 233.88
Dividends reinvested/share: $7.84
Total return: -12.08%
Average annual return: -2.54%
Starting investment: $10,000.00
Ending investment: $8,792.28

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -2.54%. This would have turned a $10K investment made 5 years ago into $8,792.28 today (as of 07/28/2020). On a total return basis, that’s a result of -12.08% (something to think about: how might MET shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that MetLife Inc paid investors a total of $7.84/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 1.84/share, we calculate that MET has a current yield of approximately 4.89%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.84 against the original $51.00/share purchase price. This works out to a yield on cost of 9.59%.

More investment wisdom to ponder:
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” — Warren Buffett