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 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 AT&T Inc (NYSE: T)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 02/20/2019


End date: 02/16/2024
Start price/share: $23.30
End price/share: $16.97
Starting shares: 429.18
Ending shares: 596.71
Dividends reinvested/share: $6.91
Total return: 1.26%
Average annual return: 0.25%
Starting investment: $10,000.00
Ending investment: $10,125.42

As we can see, the five year investment result worked out as follows, with an annualized rate of return of 0.25%. This would have turned a $10K investment made 5 years ago into $10,125.42 today (as of 02/16/2024). On a total return basis, that’s a result of 1.26% (something to think about: how might T shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that AT&T Inc paid investors a total of $6.91/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 1.11/share, we calculate that T has a current yield of approximately 6.54%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.11 against the original $23.30/share purchase price. This works out to a yield on cost of 28.07%.

One more investment quote to leave you with:
“Know what you own and why you own it.” — Peter Lynch