“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 Lumen Technologies Inc (NYSE: LUMN)? Today, we examine the outcome of a five year investment into the stock back in 2017.
Start date:  11/02/2017 


End date:  11/01/2022  
Start price/share:  $17.46  
End price/share:  $7.43  
Starting shares:  572.74  
Ending shares:  899.80  
Dividends reinvested/share:  $6.20  
Total return:  33.15%  
Average annual return:  7.74%  
Starting investment:  $10,000.00  
Ending investment:  $6,684.47 
As shown above, the five year investment result worked out poorly, with an annualized rate of return of 7.74%. This would have turned a $10K investment made 5 years ago into $6,684.47 today (as of 11/01/2022). On a total return basis, that’s a result of 33.15% (something to think about: how might LUMN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Lumen Technologies Inc paid investors a total of $6.20/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 1/share, we calculate that LUMN has a current yield of approximately 13.46%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $17.46/share purchase price. This works out to a yield on cost of 77.09%.
One more piece of investment wisdom to leave you with:
“You’ve got to be careful if you don’t know where you’re going, ’cause you might not get there.” — Yogi Berra