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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 HollyFrontier Corp (NYSE: HFC)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 08/18/2015


End date: 08/17/2020
Start price/share: $53.26
End price/share: $26.50
Starting shares: 187.76
Ending shares: 225.94
Dividends reinvested/share: $7.01
Total return: -40.13%
Average annual return: -9.74%
Starting investment: $10,000.00
Ending investment: $5,989.01

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -9.74%. This would have turned a $10K investment made 5 years ago into $5,989.01 today (as of 08/17/2020). On a total return basis, that’s a result of -40.13% (something to think about: how might HFC shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that HollyFrontier Corp paid investors a total of $7.01/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 1.4/share, we calculate that HFC has a current yield of approximately 5.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.4 against the original $53.26/share purchase price. This works out to a yield on cost of 9.91%.

One more piece of investment wisdom to leave you with:
“You can’t restate a dividend.” — Malon Wilkus