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 Conagra Brands Inc (NYSE: CAG)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 10/22/2018


End date: 10/19/2023
Start price/share: $36.23
End price/share: $27.15
Starting shares: 276.01
Ending shares: 322.91
Dividends reinvested/share: $5.24
Total return: -12.33%
Average annual return: -2.60%
Starting investment: $10,000.00
Ending investment: $8,767.13

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -2.60%. This would have turned a $10K investment made 5 years ago into $8,767.13 today (as of 10/19/2023). On a total return basis, that’s a result of -12.33% (something to think about: how might CAG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Conagra Brands Inc paid investors a total of $5.24/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 1.4/share, we calculate that CAG has a current yield of approximately 5.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.4 against the original $36.23/share purchase price. This works out to a yield on cost of 14.24%.

More investment wisdom to ponder:
“The best stock to buy is the one you already own.” — Peter Lynch