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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 Ford Motor Co. (NYSE: F)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 07/23/2018


End date: 07/20/2023
Start price/share: $10.47
End price/share: $14.03
Starting shares: 955.11
Ending shares: 1,177.31
Dividends reinvested/share: $2.45
Total return: 65.18%
Average annual return: 10.57%
Starting investment: $10,000.00
Ending investment: $16,517.62

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 10.57%. This would have turned a $10K investment made 5 years ago into $16,517.62 today (as of 07/20/2023). On a total return basis, that’s a result of 65.18% (something to think about: how might F shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Ford Motor Co. paid investors a total of $2.45/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 .6/share, we calculate that F has a current yield of approximately 4.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .6 against the original $10.47/share purchase price. This works out to a yield on cost of 40.88%.

One more investment quote to leave you with:
“The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.” — T. Boone Pickens