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 PerkinElmer, Inc. (NYSE: PKI)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 10/30/2015


End date: 10/29/2020
Start price/share: $51.64
End price/share: $128.79
Starting shares: 193.65
Ending shares: 197.44
Dividends reinvested/share: $1.40
Total return: 154.29%
Average annual return: 20.51%
Starting investment: $10,000.00
Ending investment: $25,429.48

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 20.51%. This would have turned a $10K investment made 5 years ago into $25,429.48 today (as of 10/29/2020). On a total return basis, that’s a result of 154.29% (something to think about: how might PKI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that PerkinElmer, Inc. paid investors a total of $1.40/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 .28/share, we calculate that PKI has a current yield of approximately 0.22%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .28 against the original $51.64/share purchase price. This works out to a yield on cost of 0.43%.

One more piece of investment wisdom to leave you with:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban