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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 Citigroup Inc (NYSE: C)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 02/06/2017


End date: 02/03/2022
Start price/share: $57.64
End price/share: $65.26
Starting shares: 173.49
Ending shares: 198.06
Dividends reinvested/share: $8.34
Total return: 29.25%
Average annual return: 5.27%
Starting investment: $10,000.00
Ending investment: $12,924.12

As shown above, the five year investment result worked out well, with an annualized rate of return of 5.27%. This would have turned a $10K investment made 5 years ago into $12,924.12 today (as of 02/03/2022). On a total return basis, that’s a result of 29.25% (something to think about: how might C shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Citigroup Inc paid investors a total of $8.34/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 2.04/share, we calculate that C has a current yield of approximately 3.13%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.04 against the original $57.64/share purchase price. This works out to a yield on cost of 5.43%.

One more piece of investment wisdom to leave you with:
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” — Warren Buffett