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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?

Today, let’s look backwards in time to 2018, and take a look at what happened to investors who asked that very question about Hartford Financial Services Group Inc. (NYSE: HIG), by taking a look at the investment outcome over a five year holding period.

Start date: 10/11/2018


End date: 10/10/2023
Start price/share: $46.82
End price/share: $71.00
Starting shares: 213.58
Ending shares: 241.26
Dividends reinvested/share: $7.09
Total return: 71.30%
Average annual return: 11.37%
Starting investment: $10,000.00
Ending investment: $17,133.30

The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 11.37%. This would have turned a $10K investment made 5 years ago into $17,133.30 today (as of 10/10/2023). On a total return basis, that’s a result of 71.30% (something to think about: how might HIG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Hartford Financial Services Group Inc. paid investors a total of $7.09/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 1.7/share, we calculate that HIG has a current yield of approximately 2.39%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.7 against the original $46.82/share purchase price. This works out to a yield on cost of 5.10%.

Here’s one more great investment quote before you go:
“The function of economic forecasting is to make astrology look respectable.” — John Galbraith