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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 Global Payments Inc (NYSE: GPN)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 05/13/2019


End date: 05/10/2024
Start price/share: $143.60
End price/share: $109.23
Starting shares: 69.64
Ending shares: 71.79
Dividends reinvested/share: $4.13
Total return: -21.58%
Average annual return: -4.75%
Starting investment: $10,000.00
Ending investment: $7,841.21

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -4.75%. This would have turned a $10K investment made 5 years ago into $7,841.21 today (as of 05/10/2024). On a total return basis, that’s a result of -21.58% (something to think about: how might GPN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Global Payments Inc paid investors a total of $4.13/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/share, we calculate that GPN has a current yield of approximately 0.92%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $143.60/share purchase price. This works out to a yield on cost of 0.64%.

Another great investment quote to think about:
“Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part-ownership of a business.” — Peter Lynch