“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 PVH Corp (NYSE: PVH)? Today, we examine the outcome of a five year investment into the stock back in 2016.
| Start date: | 03/31/2016 |
|
|||
| End date: | 03/30/2021 | ||||
| Start price/share: | $99.06 | ||||
| End price/share: | $100.12 | ||||
| Starting shares: | 100.95 | ||||
| Ending shares: | 101.59 | ||||
| Dividends reinvested/share: | $0.61 | ||||
| Total return: | 1.71% | ||||
| Average annual return: | 0.34% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,171.16 | ||||
As we can see, the five year investment result worked out as follows, with an annualized rate of return of 0.34%. This would have turned a $10K investment made 5 years ago into $10,171.16 today (as of 03/30/2021). On a total return basis, that’s a result of 1.71% (something to think about: how might PVH shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that PVH Corp paid investors a total of $0.61/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 .15/share, we calculate that PVH has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .15 against the original $99.06/share purchase price. This works out to a yield on cost of 0.00%.
More investment wisdom to ponder:
“Spend each day trying to be a little wiser than you were when you woke up.” — Charlie Munger
