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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 Host Hotels & Resorts Inc (NASD: HST)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 11/08/2017


End date: 11/07/2022
Start price/share: $20.19
End price/share: $17.17
Starting shares: 495.29
Ending shares: 566.10
Dividends reinvested/share: $2.36
Total return: -2.80%
Average annual return: -0.57%
Starting investment: $10,000.00
Ending investment: $9,718.23

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -0.57%. This would have turned a $10K investment made 5 years ago into $9,718.23 today (as of 11/07/2022). On a total return basis, that’s a result of -2.80% (something to think about: how might HST shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Host Hotels & Resorts Inc paid investors a total of $2.36/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 .48/share, we calculate that HST has a current yield of approximately 2.80%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .48 against the original $20.19/share purchase price. This works out to a yield on cost of 13.87%.

One more piece of investment wisdom to leave you with:
“I make no attempt to forecast the market; my efforts are devoted to finding undervalued securities.” — Warren Buffett