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

Start date: 03/12/2019


End date: 03/11/2024
Start price/share: $111.15
End price/share: $142.50
Starting shares: 89.97
Ending shares: 98.20
Dividends reinvested/share: $11.47
Total return: 39.94%
Average annual return: 6.95%
Starting investment: $10,000.00
Ending investment: $13,995.35

The above analysis shows the five year investment result worked out well, with an annualized rate of return of 6.95%. This would have turned a $10K investment made 5 years ago into $13,995.35 today (as of 03/11/2024). On a total return basis, that’s a result of 39.94% (something to think about: how might PPG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that PPG Industries Inc paid investors a total of $11.47/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 2.6/share, we calculate that PPG has a current yield of approximately 1.82%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.6 against the original $111.15/share purchase price. This works out to a yield on cost of 1.64%.

More investment wisdom to ponder:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt