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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?

Today, let’s look backwards in time to 2016, and take a look at what happened to investors who asked that very question about TE Connectivity Ltd (NYSE: TEL), by taking a look at the investment outcome over a five year holding period.

Start date: 03/11/2016


End date: 03/10/2021
Start price/share: $59.72
End price/share: $130.09
Starting shares: 167.45
Ending shares: 185.32
Dividends reinvested/share: $8.60
Total return: 141.08%
Average annual return: 19.24%
Starting investment: $10,000.00
Ending investment: $24,105.15

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 19.24%. This would have turned a $10K investment made 5 years ago into $24,105.15 today (as of 03/10/2021). On a total return basis, that’s a result of 141.08% (something to think about: how might TEL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that TE Connectivity Ltd paid investors a total of $8.60/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 1.92/share, we calculate that TEL has a current yield of approximately 1.48%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.92 against the original $59.72/share purchase price. This works out to a yield on cost of 2.48%.

One more investment quote to leave you with:
“The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.” — Bruce Kovner