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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 Franklin Resources Inc (NYSE: BEN)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 09/28/2017


End date: 09/27/2022
Start price/share: $44.55
End price/share: $22.64
Starting shares: 224.47
Ending shares: 293.93
Dividends reinvested/share: $8.23
Total return: -33.45%
Average annual return: -7.82%
Starting investment: $10,000.00
Ending investment: $6,655.54

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -7.82%. This would have turned a $10K investment made 5 years ago into $6,655.54 today (as of 09/27/2022). On a total return basis, that’s a result of -33.45% (something to think about: how might BEN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Franklin Resources Inc paid investors a total of $8.23/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 1.16/share, we calculate that BEN has a current yield of approximately 5.12%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.16 against the original $44.55/share purchase price. This works out to a yield on cost of 11.49%.

One more investment quote to leave you with:
“The person who starts simply with the idea of getting rich won’t succeed; you must have a larger ambition.” — John Rockefeller