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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 Global Payments Inc (NYSE: GPN)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 01/08/2018


End date: 01/05/2023
Start price/share: $104.18
End price/share: $101.98
Starting shares: 95.99
Ending shares: 97.93
Dividends reinvested/share: $2.94
Total return: -0.13%
Average annual return: -0.03%
Starting investment: $10,000.00
Ending investment: $9,985.03

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -0.03%. This would have turned a $10K investment made 5 years ago into $9,985.03 today (as of 01/05/2023). On a total return basis, that’s a result of -0.13% (something to think about: how might GPN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Global Payments Inc paid investors a total of $2.94/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/share, we calculate that GPN has a current yield of approximately 0.98%. 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 $104.18/share purchase price. This works out to a yield on cost of 0.94%.

More investment wisdom to ponder:
“Don’t look for the needle in the haystack, just buy the haystack.” — John Bogle