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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 Wynn Resorts Ltd (NASD: WYNN)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 07/07/2017


End date: 07/06/2022
Start price/share: $132.46
End price/share: $55.84
Starting shares: 75.49
Ending shares: 80.81
Dividends reinvested/share: $8.50
Total return: -54.88%
Average annual return: -14.71%
Starting investment: $10,000.00
Ending investment: $4,513.26

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -14.71%. This would have turned a $10K investment made 5 years ago into $4,513.26 today (as of 07/06/2022). On a total return basis, that’s a result of -54.88% (something to think about: how might WYNN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Wynn Resorts Ltd paid investors a total of $8.50/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 4/share, we calculate that WYNN has a current yield of approximately 7.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4 against the original $132.46/share purchase price. This works out to a yield on cost of 5.41%.

One more investment quote to leave you with:
“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.” — Warren Buffett