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

Start date: 10/05/2018


End date: 10/04/2023
Start price/share: $236.06
End price/share: $260.05
Starting shares: 42.36
Ending shares: 45.97
Dividends reinvested/share: $16.62
Total return: 19.55%
Average annual return: 3.64%
Starting investment: $10,000.00
Ending investment: $11,957.41

As we can see, the five year investment result worked out as follows, with an annualized rate of return of 3.64%. This would have turned a $10K investment made 5 years ago into $11,957.41 today (as of 10/04/2023). On a total return basis, that’s a result of 19.55% (something to think about: how might FDX shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that FedEx Corp paid investors a total of $16.62/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 5.04/share, we calculate that FDX has a current yield of approximately 1.94%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.04 against the original $236.06/share purchase price. This works out to a yield on cost of 0.82%.

One more piece of investment wisdom to leave you with:
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” — Warren Buffett