Photo credit:

“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 Apple Inc (NASD: AAPL)? Today, we examine the outcome of a five year investment into the stock back in 2016.

Start date: 09/21/2016


End date: 09/20/2021
Start price/share: $28.39
End price/share: $142.94
Starting shares: 352.24
Ending shares: 375.65
Dividends reinvested/share: $3.68
Total return: 436.95%
Average annual return: 39.95%
Starting investment: $10,000.00
Ending investment: $53,686.43

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 39.95%. This would have turned a $10K investment made 5 years ago into $53,686.43 today (as of 09/20/2021). On a total return basis, that’s a result of 436.95% (something to think about: how might AAPL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Apple Inc paid investors a total of $3.68/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 .88/share, we calculate that AAPL has a current yield of approximately 0.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .88 against the original $28.39/share purchase price. This works out to a yield on cost of 2.18%.

More investment wisdom to ponder:
“Successful investing is anticipating the anticipations of others.” — John Maynard Keynes