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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 Air Products & Chemicals Inc (NYSE: APD)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 03/23/2017


End date: 03/22/2022
Start price/share: $137.05
End price/share: $236.54
Starting shares: 72.97
Ending shares: 82.03
Dividends reinvested/share: $24.20
Total return: 94.04%
Average annual return: 14.18%
Starting investment: $10,000.00
Ending investment: $19,406.63

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 14.18%. This would have turned a $10K investment made 5 years ago into $19,406.63 today (as of 03/22/2022). On a total return basis, that’s a result of 94.04% (something to think about: how might APD shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Air Products & Chemicals Inc paid investors a total of $24.20/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 6.48/share, we calculate that APD has a current yield of approximately 2.74%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 6.48 against the original $137.05/share purchase price. This works out to a yield on cost of 2.00%.

One more piece of investment wisdom to leave you with:
“There is nothing riskier than the widespread perception that there is no risk.” — Howard Marks