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

Start date: 04/26/2017


End date: 04/25/2022
Start price/share: $81.42
End price/share: $135.73
Starting shares: 122.82
Ending shares: 124.53
Dividends reinvested/share: $2.22
Total return: 69.02%
Average annual return: 11.07%
Starting investment: $10,000.00
Ending investment: $16,903.78

As we can see, the five year investment result worked out quite well, with an annualized rate of return of 11.07%. This would have turned a $10K investment made 5 years ago into $16,903.78 today (as of 04/25/2022). On a total return basis, that’s a result of 69.02% (something to think about: how might GPN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Global Payments Inc paid investors a total of $2.22/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/share, we calculate that GPN 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 1 against the original $81.42/share purchase price. This works out to a yield on cost of 0.91%.

More investment wisdom to ponder:
“People who invest make money for themselves; people who speculate make money for their brokers.” — Benjamin Graham