“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 longterm 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 Goldman Sachs Group Inc (NYSE: GS)? Today, we examine the outcome of a five year investment into the stock back in 2017.
Start date:  09/12/2017 


End date:  09/09/2022  
Start price/share:  $225.95  
End price/share:  $340.10  
Starting shares:  44.26  
Ending shares:  48.82  
Dividends reinvested/share:  $26.05  
Total return:  66.03%  
Average annual return:  10.68%  
Starting investment:  $10,000.00  
Ending investment:  $16,599.85 
As we can see, the five year investment result worked out quite well, with an annualized rate of return of 10.68%. This would have turned a $10K investment made 5 years ago into $16,599.85 today (as of 09/09/2022). On a total return basis, that’s a result of 66.03% (something to think about: how might GS shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Goldman Sachs Group Inc paid investors a total of $26.05/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 exdate is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 10/share, we calculate that GS has a current yield of approximately 2.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 10 against the original $225.95/share purchase price. This works out to a yield on cost of 1.30%.
Here’s one more great investment quote before you go:
“Price is what you pay. Value is what you get.” — Warren Buffett