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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

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 3M Co (NYSE: MMM)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 03/04/2019


End date: 03/01/2024
Start price/share: $206.86
End price/share: $91.86
Starting shares: 48.34
Ending shares: 59.73
Dividends reinvested/share: $29.59
Total return: -45.13%
Average annual return: -11.32%
Starting investment: $10,000.00
Ending investment: $5,486.20

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -11.32%. This would have turned a $10K investment made 5 years ago into $5,486.20 today (as of 03/01/2024). On a total return basis, that’s a result of -45.13% (something to think about: how might MMM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that 3M Co paid investors a total of $29.59/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 6.04/share, we calculate that MMM has a current yield of approximately 6.58%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 6.04 against the original $206.86/share purchase price. This works out to a yield on cost of 3.18%.

Another great investment quote to think about:
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” — Charlie Munger