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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 H & R Block, Inc. (NYSE: HRB)? 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: $31.53
End price/share: $13.96
Starting shares: 317.16
Ending shares: 386.07
Dividends reinvested/share: $4.74
Total return: -46.10%
Average annual return: -11.63%
Starting investment: $10,000.00
Ending investment: $5,391.03

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -11.63%. This would have turned a $10K investment made 5 years ago into $5,391.03 today (as of 07/10/2020). On a total return basis, that’s a result of -46.10% (something to think about: how might HRB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that H & R Block, Inc. paid investors a total of $4.74/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 1.04/share, we calculate that HRB has a current yield of approximately 7.45%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.04 against the original $31.53/share purchase price. This works out to a yield on cost of 23.63%.

One more investment quote to leave you with:
“A risk-reward ratio is important, but so is an aggravation-satisfaction ratio.” — Muriel Siebert