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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

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2019, investors considering an investment into shares of Best Buy Inc (NYSE: BBY) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.

Start date: 03/05/2019


End date: 03/04/2024
Start price/share: $66.81
End price/share: $77.54
Starting shares: 149.68
Ending shares: 178.22
Dividends reinvested/share: $14.20
Total return: 38.19%
Average annual return: 6.68%
Starting investment: $10,000.00
Ending investment: $13,819.49

The above analysis shows the five year investment result worked out well, with an annualized rate of return of 6.68%. This would have turned a $10K investment made 5 years ago into $13,819.49 today (as of 03/04/2024). On a total return basis, that’s a result of 38.19% (something to think about: how might BBY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Best Buy Inc paid investors a total of $14.20/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 3.76/share, we calculate that BBY has a current yield of approximately 4.85%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.76 against the original $66.81/share purchase price. This works out to a yield on cost of 7.26%.

Another great investment quote to think about:
“In the long run, we are all dead.” — John Maynard Keynes