Photo credit:

“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 2019, and take a look at what happened to investors who asked that very question about Albemarle Corp. (NYSE: ALB), by taking a look at the investment outcome over a five year holding period.

Start date: 02/21/2019


End date: 02/20/2024
Start price/share: $89.26
End price/share: $114.82
Starting shares: 112.03
Ending shares: 119.07
Dividends reinvested/share: $7.75
Total return: 36.72%
Average annual return: 6.46%
Starting investment: $10,000.00
Ending investment: $13,675.16

As shown above, the five year investment result worked out well, with an annualized rate of return of 6.46%. This would have turned a $10K investment made 5 years ago into $13,675.16 today (as of 02/20/2024). On a total return basis, that’s a result of 36.72% (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 $7.75/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 1.39%. 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 $89.26/share purchase price. This works out to a yield on cost of 1.56%.

One more piece of investment wisdom to leave you with:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch