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 Campbell Soup Co (NYSE: CPB)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 03/28/2017


End date: 03/25/2022
Start price/share: $57.62
End price/share: $44.53
Starting shares: 173.55
Ending shares: 203.39
Dividends reinvested/share: $7.10
Total return: -9.43%
Average annual return: -1.96%
Starting investment: $10,000.00
Ending investment: $9,058.65

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -1.96%. This would have turned a $10K investment made 5 years ago into $9,058.65 today (as of 03/25/2022). On a total return basis, that’s a result of -9.43% (something to think about: how might CPB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Campbell Soup Co paid investors a total of $7.10/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 1.48/share, we calculate that CPB has a current yield of approximately 3.32%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.48 against the original $57.62/share purchase price. This works out to a yield on cost of 5.76%.

Another great investment quote to think about:
“The best stock to buy is the one you already own.” — Peter Lynch