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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Robert Half International Inc. (NYSE: RHI) back in 2016: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 06/23/2016


End date: 06/22/2021
Start price/share: $39.69
End price/share: $87.88
Starting shares: 251.95
Ending shares: 279.15
Dividends reinvested/share: $5.88
Total return: 145.32%
Average annual return: 19.66%
Starting investment: $10,000.00
Ending investment: $24,532.68

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 19.66%. This would have turned a $10K investment made 5 years ago into $24,532.68 today (as of 06/22/2021). On a total return basis, that’s a result of 145.32% (something to think about: how might RHI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Robert Half International Inc. paid investors a total of $5.88/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 1.52/share, we calculate that RHI has a current yield of approximately 1.73%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.52 against the original $39.69/share purchase price. This works out to a yield on cost of 4.36%.

Another great investment quote to think about:
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” — Benjamin Graham