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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 Molson Coors Beverage Co (NYSE: TAP)? Today, we examine the outcome of a five year investment into the stock back in 2016.

Start date: 07/11/2016


End date: 07/08/2021
Start price/share: $101.62
End price/share: $52.73
Starting shares: 98.41
Ending shares: 108.63
Dividends reinvested/share: $6.63
Total return: -42.72%
Average annual return: -10.56%
Starting investment: $10,000.00
Ending investment: $5,726.97

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -10.56%. This would have turned a $10K investment made 5 years ago into $5,726.97 today (as of 07/08/2021). On a total return basis, that’s a result of -42.72% (something to think about: how might TAP shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Molson Coors Beverage Co paid investors a total of $6.63/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 2.28/share, we calculate that TAP has a current yield of approximately 4.32%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.28 against the original $101.62/share purchase price. This works out to a yield on cost of 4.25%.

One more investment quote to leave you with:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” — Benjamin Graham