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

Start date: 02/22/2017


End date: 02/18/2022
Start price/share: $40.48
End price/share: $36.02
Starting shares: 247.04
Ending shares: 284.70
Dividends reinvested/share: $4.73
Total return: 2.55%
Average annual return: 0.51%
Starting investment: $10,000.00
Ending investment: $10,257.19

As we can see, the five year investment result worked out as follows, with an annualized rate of return of 0.51%. This would have turned a $10K investment made 5 years ago into $10,257.19 today (as of 02/18/2022). On a total return basis, that’s a result of 2.55% (something to think about: how might CAG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Conagra Brands Inc paid investors a total of $4.73/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 1.25/share, we calculate that CAG has a current yield of approximately 3.47%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.25 against the original $40.48/share purchase price. This works out to a yield on cost of 8.57%.

Here’s one more great investment quote before you go:
“The policy of being too cautious is the greatest risk of all.” — Jawaharlal Nehru