“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 longterm 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 McKesson Corp (NYSE: MCK)? Today, we examine the outcome of a five year investment into the stock back in 2015.
Start date:  11/10/2015 


End date:  11/09/2020  
Start price/share:  $184.66  
End price/share:  $178.51  
Starting shares:  54.15  
Ending shares:  56.79  
Dividends reinvested/share:  $6.94  
Total return:  1.37%  
Average annual return:  0.27%  
Starting investment:  $10,000.00  
Ending investment:  $10,135.81 
As we can see, the five year investment result worked out as follows, with an annualized rate of return of 0.27%. This would have turned a $10K investment made 5 years ago into $10,135.81 today (as of 11/09/2020). On a total return basis, that’s a result of 1.37% (something to think about: how might MCK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that McKesson Corp paid investors a total of $6.94/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 exdate is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 1.68/share, we calculate that MCK has a current yield of approximately 0.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.68 against the original $184.66/share purchase price. This works out to a yield on cost of 0.51%.
One more piece of investment wisdom to leave you with:
“Markets can remain irrational longer than you can remain solvent.” — John Maynard Keynes