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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 Kimberly-Clark Corp. (NYSE: KMB)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 12/12/2018


End date: 12/11/2023
Start price/share: $113.92
End price/share: $120.97
Starting shares: 87.78
Ending shares: 103.88
Dividends reinvested/share: $22.32
Total return: 25.66%
Average annual return: 4.67%
Starting investment: $10,000.00
Ending investment: $12,563.51

As shown above, the five year investment result worked out as follows, with an annualized rate of return of 4.67%. This would have turned a $10K investment made 5 years ago into $12,563.51 today (as of 12/11/2023). On a total return basis, that’s a result of 25.66% (something to think about: how might KMB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Kimberly-Clark Corp. paid investors a total of $22.32/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 4.72/share, we calculate that KMB has a current yield of approximately 3.90%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.72 against the original $113.92/share purchase price. This works out to a yield on cost of 3.42%.

Here’s one more great investment quote before you go:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis