Photo credit:

“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 Stanley Black & Decker Inc (NYSE: SWK)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 09/22/2017


End date: 09/21/2022
Start price/share: $151.22
End price/share: $83.46
Starting shares: 66.13
Ending shares: 72.84
Dividends reinvested/share: $14.05
Total return: -39.20%
Average annual return: -9.47%
Starting investment: $10,000.00
Ending investment: $6,080.83

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -9.47%. This would have turned a $10K investment made 5 years ago into $6,080.83 today (as of 09/21/2022). On a total return basis, that’s a result of -39.20% (something to think about: how might SWK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Stanley Black & Decker Inc paid investors a total of $14.05/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 ex-date is used for the reinvestment of a given dividend).

Based upon the most recent annualized dividend rate of 3.2/share, we calculate that SWK has a current yield of approximately 3.83%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.2 against the original $151.22/share purchase price. This works out to a yield on cost of 2.53%.

Here’s one more great investment quote before you go:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban