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

Start date: 11/16/2018


End date: 11/15/2023
Start price/share: $59.96
End price/share: $14.57
Starting shares: 166.78
Ending shares: 177.22
Dividends reinvested/share: $3.00
Total return: -74.18%
Average annual return: -23.72%
Starting investment: $10,000.00
Ending investment: $2,582.58

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -23.72%. This would have turned a $10K investment made 5 years ago into $2,582.58 today (as of 11/15/2023). On a total return basis, that’s a result of -74.18% (something to think about: how might CCL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Carnival Corp paid investors a total of $3.00/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 2/share, we calculate that CCL has a current yield of approximately 13.73%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2 against the original $59.96/share purchase price. This works out to a yield on cost of 22.90%.

One more piece of investment wisdom to leave you with:
“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently.” — Jack Bogle