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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 Wynn Resorts Ltd (NASD: WYNN)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 10/25/2018


End date: 10/24/2023
Start price/share: $103.22
End price/share: $91.42
Starting shares: 96.88
Ending shares: 102.20
Dividends reinvested/share: $6.00
Total return: -6.57%
Average annual return: -1.35%
Starting investment: $10,000.00
Ending investment: $9,342.98

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -1.35%. This would have turned a $10K investment made 5 years ago into $9,342.98 today (as of 10/24/2023). On a total return basis, that’s a result of -6.57% (something to think about: how might WYNN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Wynn Resorts Ltd paid investors a total of $6.00/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/share, we calculate that WYNN has a current yield of approximately 1.09%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $103.22/share purchase price. This works out to a yield on cost of 1.06%.

Another great investment quote to think about:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger