“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 DENTSPLY SIRONA Inc (NASD: XRAY)? Today, we examine the outcome of a five year investment into the stock back in 2016.
| Start date: | 11/04/2016 |
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| End date: | 11/03/2021 | ||||
| Start price/share: | $60.60 | ||||
| End price/share: | $59.22 | ||||
| Starting shares: | 165.02 | ||||
| Ending shares: | 171.18 | ||||
| Dividends reinvested/share: | $1.88 | ||||
| Total return: | 1.37% | ||||
| Average annual return: | 0.27% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,135.73 | ||||
As we can see, the five year investment result worked out as follows, with an annualized rate of return of 0.27%. This would have turned a $10K investment made 5 years ago into $10,135.73 today (as of 11/03/2021). On a total return basis, that’s a result of 1.37% (something to think about: how might XRAY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that DENTSPLY SIRONA Inc paid investors a total of $1.88/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 .44/share, we calculate that XRAY has a current yield of approximately 0.74%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .44 against the original $60.60/share purchase price. This works out to a yield on cost of 1.22%.
Another great investment quote to think about:
“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch
