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

Start date: 11/07/2018


End date: 11/06/2023
Start price/share: $107.99
End price/share: $119.46
Starting shares: 92.60
Ending shares: 98.53
Dividends reinvested/share: $7.69
Total return: 17.70%
Average annual return: 3.31%
Starting investment: $10,000.00
Ending investment: $11,768.25

As shown above, the five year investment result worked out as follows, with an annualized rate of return of 3.31%. This would have turned a $10K investment made 5 years ago into $11,768.25 today (as of 11/06/2023). On a total return basis, that’s a result of 17.70% (something to think about: how might ALB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Albemarle Corp. paid investors a total of $7.69/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 1.6/share, we calculate that ALB has a current yield of approximately 1.34%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.6 against the original $107.99/share purchase price. This works out to a yield on cost of 1.24%.

One more piece of investment wisdom to leave you with:
“Markets can remain irrational longer than you can remain solvent.” — John Maynard Keynes