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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

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2017, investors considering an investment into shares of PPG Industries Inc (NYSE: PPG) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.

Start date: 08/01/2017


End date: 07/29/2022
Start price/share: $105.11
End price/share: $129.29
Starting shares: 95.14
Ending shares: 103.39
Dividends reinvested/share: $10.28
Total return: 33.67%
Average annual return: 5.98%
Starting investment: $10,000.00
Ending investment: $13,365.38

As shown above, the five year investment result worked out well, with an annualized rate of return of 5.98%. This would have turned a $10K investment made 5 years ago into $13,365.38 today (as of 07/29/2022). On a total return basis, that’s a result of 33.67% (something to think about: how might PPG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that PPG Industries Inc paid investors a total of $10.28/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 2.48/share, we calculate that PPG has a current yield of approximately 1.92%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.48 against the original $105.11/share purchase price. This works out to a yield on cost of 1.83%.

More investment wisdom to ponder:
“Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part-ownership of a business.” — Peter Lynch