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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?

Today, let’s look backwards in time to 2017, and take a look at what happened to investors who asked that very question about Sherwin-Williams Co (NYSE: SHW), by taking a look at the investment outcome over a five year holding period.

Start date: 04/19/2017


End date: 04/18/2022
Start price/share: $103.85
End price/share: $246.17
Starting shares: 96.29
Ending shares: 100.61
Dividends reinvested/share: $8.09
Total return: 147.67%
Average annual return: 19.89%
Starting investment: $10,000.00
Ending investment: $24,769.36

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 19.89%. This would have turned a $10K investment made 5 years ago into $24,769.36 today (as of 04/18/2022). On a total return basis, that’s a result of 147.67% (something to think about: how might SHW shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Sherwin-Williams Co paid investors a total of $8.09/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 2.4/share, we calculate that SHW has a current yield of approximately 0.97%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.4 against the original $103.85/share purchase price. This works out to a yield on cost of 0.93%.

More investment wisdom to ponder:
“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” — John Bogle