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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 Omnicom Group, Inc. (NYSE: OMC)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 05/26/2017


End date: 05/25/2022
Start price/share: $83.26
End price/share: $72.08
Starting shares: 120.11
Ending shares: 143.85
Dividends reinvested/share: $12.80
Total return: 3.69%
Average annual return: 0.73%
Starting investment: $10,000.00
Ending investment: $10,370.37

The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 0.73%. This would have turned a $10K investment made 5 years ago into $10,370.37 today (as of 05/25/2022). On a total return basis, that’s a result of 3.69% (something to think about: how might OMC shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Omnicom Group, Inc. paid investors a total of $12.80/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 2.8/share, we calculate that OMC has a current yield of approximately 3.88%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.8 against the original $83.26/share purchase price. This works out to a yield on cost of 4.66%.

Here’s one more great investment quote before you go:
“Searching for companies is like looking for grubs under rocks: if you turn over 10 rocks you’ll likely find one grub; if you turn over 20 rocks you’ll find two.” — Peter Lynch