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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 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 Loews Corp. (NYSE: L), by taking a look at the investment outcome over a five year holding period.

Start date: 03/01/2019


End date: 02/29/2024
Start price/share: $47.90
End price/share: $75.13
Starting shares: 208.77
Ending shares: 213.79
Dividends reinvested/share: $1.26
Total return: 60.62%
Average annual return: 9.94%
Starting investment: $10,000.00
Ending investment: $16,065.40

As shown above, the five year investment result worked out well, with an annualized rate of return of 9.94%. This would have turned a $10K investment made 5 years ago into $16,065.40 today (as of 02/29/2024). On a total return basis, that’s a result of 60.62% (something to think about: how might L shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Loews Corp. paid investors a total of $1.26/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 .25/share, we calculate that L has a current yield of approximately 0.33%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .25 against the original $47.90/share purchase price. This works out to a yield on cost of 0.69%.

One more piece of investment wisdom to leave you with:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” — Warren Buffett