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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 Avery Dennison Corp (NYSE: AVY)? Today, we examine the outcome of a five year investment into the stock back in 2016.

Start date: 07/12/2016


End date: 07/09/2021
Start price/share: $72.96
End price/share: $210.35
Starting shares: 137.06
Ending shares: 150.64
Dividends reinvested/share: $10.51
Total return: 216.87%
Average annual return: 25.98%
Starting investment: $10,000.00
Ending investment: $31,692.64

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 25.98%. This would have turned a $10K investment made 5 years ago into $31,692.64 today (as of 07/09/2021). On a total return basis, that’s a result of 216.87% (something to think about: how might AVY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Avery Dennison Corp paid investors a total of $10.51/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 2.72/share, we calculate that AVY has a current yield of approximately 1.29%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.72 against the original $72.96/share purchase price. This works out to a yield on cost of 1.77%.

One more investment quote to leave you with:
“Investors should purchase stocks like they purchase groceries, not like they purchase perfume.” — Benjamin Graham