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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 Delta Air Lines Inc (NYSE: DAL)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 05/14/2018


End date: 05/11/2023
Start price/share: $52.09
End price/share: $33.22
Starting shares: 191.98
Ending shares: 201.19
Dividends reinvested/share: $2.61
Total return: -33.17%
Average annual return: -7.75%
Starting investment: $10,000.00
Ending investment: $6,683.81

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -7.75%. This would have turned a $10K investment made 5 years ago into $6,683.81 today (as of 05/11/2023). On a total return basis, that’s a result of -33.17% (something to think about: how might DAL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Delta Air Lines Inc paid investors a total of $2.61/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 1.61/share, we calculate that DAL has a current yield of approximately 4.85%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.61 against the original $52.09/share purchase price. This works out to a yield on cost of 9.31%.

Here’s one more great investment quote before you go:
“Markets can remain irrational longer than you can remain solvent.” — John Maynard Keynes