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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 Host Hotels & Resorts Inc (NYSE: HST)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 08/27/2015


End date: 08/26/2020
Start price/share: $18.17
End price/share: $11.01
Starting shares: 550.36
Ending shares: 692.38
Dividends reinvested/share: $4.00
Total return: -23.77%
Average annual return: -5.28%
Starting investment: $10,000.00
Ending investment: $7,623.32

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -5.28%. This would have turned a $10K investment made 5 years ago into $7,623.32 today (as of 08/26/2020). On a total return basis, that’s a result of -23.77% (something to think about: how might HST shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Host Hotels & Resorts Inc paid investors a total of $4.00/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 .8/share, we calculate that HST has a current yield of approximately 7.27%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .8 against the original $18.17/share purchase price. This works out to a yield on cost of 40.01%.

Here’s one more great investment quote before you go:
“Most investors want to do today what they should have done yesterday.” — Larry Summers