Photo credit:

“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: 08/17/2018


End date: 08/16/2023
Start price/share: $55.65
End price/share: $42.67
Starting shares: 179.69
Ending shares: 187.45
Dividends reinvested/share: $2.36
Total return: -20.01%
Average annual return: -4.37%
Starting investment: $10,000.00
Ending investment: $7,997.80

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -4.37%. This would have turned a $10K investment made 5 years ago into $7,997.80 today (as of 08/16/2023). On a total return basis, that’s a result of -20.01% (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 $2.36/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 .4/share, we calculate that DAL has a current yield of approximately 0.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .4 against the original $55.65/share purchase price. This works out to a yield on cost of 1.69%.

One more piece of investment wisdom to leave you with:
“Money is better than poverty, if only for financial reasons.” — Woody Allen