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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 Lincoln National Corp. (NYSE: LNC)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 09/20/2018


End date: 09/19/2023
Start price/share: $70.14
End price/share: $26.53
Starting shares: 142.57
Ending shares: 171.40
Dividends reinvested/share: $8.24
Total return: -54.53%
Average annual return: -14.58%
Starting investment: $10,000.00
Ending investment: $4,547.76

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -14.58%. This would have turned a $10K investment made 5 years ago into $4,547.76 today (as of 09/19/2023). On a total return basis, that’s a result of -54.53% (something to think about: how might LNC shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Lincoln National Corp. paid investors a total of $8.24/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 1.8/share, we calculate that LNC has a current yield of approximately 6.78%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.8 against the original $70.14/share purchase price. This works out to a yield on cost of 9.67%.

Another great investment quote to think about:
“I made my money by selling too soon.” — Bernard Baruch