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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Robert Half International Inc. (NYSE: RHI) back in 2017: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 05/25/2017


End date: 05/24/2022
Start price/share: $46.14
End price/share: $86.06
Starting shares: 216.73
Ending shares: 238.88
Dividends reinvested/share: $6.58
Total return: 105.58%
Average annual return: 15.50%
Starting investment: $10,000.00
Ending investment: $20,554.64

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 15.50%. This would have turned a $10K investment made 5 years ago into $20,554.64 today (as of 05/24/2022). On a total return basis, that’s a result of 105.58% (something to think about: how might RHI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Robert Half International Inc. paid investors a total of $6.58/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 1.72/share, we calculate that RHI has a current yield of approximately 2.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.72 against the original $46.14/share purchase price. This works out to a yield on cost of 4.33%.

Here’s one more great investment quote before you go:
“Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.” — Peter Lynch