“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 KimberlyClark Corp. (NYSE: KMB)? Today, we examine the outcome of a five year investment into the stock back in 2016.
Start date:  06/08/2016 


End date:  06/07/2021  
Start price/share:  $129.78  
End price/share:  $131.08  
Starting shares:  77.05  
Ending shares:  91.16  
Dividends reinvested/share:  $21.32  
Total return:  19.50%  
Average annual return:  3.63%  
Starting investment:  $10,000.00  
Ending investment:  $11,951.64 
The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 3.63%. This would have turned a $10K investment made 5 years ago into $11,951.64 today (as of 06/07/2021). On a total return basis, that’s a result of 19.50% (something to think about: how might KMB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that KimberlyClark Corp. paid investors a total of $21.32/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 4.56/share, we calculate that KMB has a current yield of approximately 3.48%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.56 against the original $129.78/share purchase price. This works out to a yield on cost of 2.68%.
Another great investment quote to think about:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett