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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 Simon Property Group, Inc. (NYSE: SPG)? 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: $179.31
End price/share: $63.98
Starting shares: 55.77
Ending shares: 69.99
Dividends reinvested/share: $36.40
Total return: -55.22%
Average annual return: -14.85%
Starting investment: $10,000.00
Ending investment: $4,478.31

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -14.85%. This would have turned a $10K investment made 5 years ago into $4,478.31 today (as of 07/10/2020). On a total return basis, that’s a result of -55.22% (something to think about: how might SPG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Simon Property Group, Inc. paid investors a total of $36.40/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 5.2/share, we calculate that SPG has a current yield of approximately 8.13%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.2 against the original $179.31/share purchase price. This works out to a yield on cost of 4.53%.

Here’s one more great investment quote before you go:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis