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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 Blackrock Inc (NYSE: BLK), by taking a look at the investment outcome over a five year holding period.

Start date: 12/18/2018


End date: 12/15/2023
Start price/share: $383.35
End price/share: $819.00
Starting shares: 26.09
Ending shares: 29.75
Dividends reinvested/share: $83.76
Total return: 143.68%
Average annual return: 19.52%
Starting investment: $10,000.00
Ending investment: $24,365.68

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 19.52%. This would have turned a $10K investment made 5 years ago into $24,365.68 today (as of 12/15/2023). On a total return basis, that’s a result of 143.68% (something to think about: how might BLK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Blackrock Inc paid investors a total of $83.76/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 20/share, we calculate that BLK has a current yield of approximately 2.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 20 against the original $383.35/share purchase price. This works out to a yield on cost of 0.64%.

Another great investment quote to think about:
“Anyone who is not investing now is missing a tremendous opportunity.” — Carlos Slim