Photo credit:

“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 Nucor Corp. (NYSE: NUE)? 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: $46.46
End price/share: $46.37
Starting shares: 215.24
Ending shares: 250.34
Dividends reinvested/share: $7.71
Total return: 16.08%
Average annual return: 3.03%
Starting investment: $10,000.00
Ending investment: $11,610.58

The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 3.03%. This would have turned a $10K investment made 5 years ago into $11,610.58 today (as of 08/17/2020). On a total return basis, that’s a result of 16.08% (something to think about: how might NUE shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Nucor Corp. paid investors a total of $7.71/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 1.61/share, we calculate that NUE has a current yield of approximately 3.47%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.61 against the original $46.46/share purchase price. This works out to a yield on cost of 7.47%.

Another great investment quote to think about:
“Though tempting, trying to time the market is a loser’s game.” — Christopher Davis