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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 Loews Corp. (NYSE: L)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 10/04/2017


End date: 10/03/2022
Start price/share: $48.54
End price/share: $51.52
Starting shares: 206.02
Ending shares: 211.33
Dividends reinvested/share: $1.26
Total return: 8.88%
Average annual return: 1.72%
Starting investment: $10,000.00
Ending investment: $10,890.10

The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 1.72%. This would have turned a $10K investment made 5 years ago into $10,890.10 today (as of 10/03/2022). On a total return basis, that’s a result of 8.88% (something to think about: how might L shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Loews Corp. paid investors a total of $1.26/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 .25/share, we calculate that L has a current yield of approximately 0.49%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .25 against the original $48.54/share purchase price. This works out to a yield on cost of 1.01%.

Here’s one more great investment quote before you go:
“Generally, the greater the stigma or revulsion, the better the bargain.” — Seth Klarman