“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 Corning Inc (NYSE: GLW)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 03/01/2019 |
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| End date: | 02/28/2024 | ||||
| Start price/share: | $34.93 | ||||
| End price/share: | $32.09 | ||||
| Starting shares: | 286.29 | ||||
| Ending shares: | 332.90 | ||||
| Dividends reinvested/share: | $4.92 | ||||
| Total return: | 6.83% | ||||
| Average annual return: | 1.33% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,682.93 | ||||
The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 1.33%. This would have turned a $10K investment made 5 years ago into $10,682.93 today (as of 02/28/2024). On a total return basis, that’s a result of 6.83% (something to think about: how might GLW shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Corning Inc paid investors a total of $4.92/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 1.12/share, we calculate that GLW has a current yield of approximately 3.49%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.12 against the original $34.93/share purchase price. This works out to a yield on cost of 9.99%.
One more piece of investment wisdom to leave you with:
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” — Peter Lynch
