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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 Simon Property Group, Inc. (NYSE: SPG)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 12/08/2015


End date: 12/07/2020
Start price/share: $187.96
End price/share: $89.37
Starting shares: 53.20
Ending shares: 66.90
Dividends reinvested/share: $34.55
Total return: -40.21%
Average annual return: -9.77%
Starting investment: $10,000.00
Ending investment: $5,979.05

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -9.77%. This would have turned a $10K investment made 5 years ago into $5,979.05 today (as of 12/07/2020). On a total return basis, that’s a result of -40.21% (something to think about: how might SPG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Simon Property Group, Inc. paid investors a total of $34.55/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 5.2/share, we calculate that SPG has a current yield of approximately 5.82%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.2 against the original $187.96/share purchase price. This works out to a yield on cost of 3.10%.

Another great investment quote to think about:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch