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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 AT&T Inc (NYSE: T)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 05/30/2019


End date: 05/29/2024
Start price/share: $24.06
End price/share: $17.12
Starting shares: 415.63
Ending shares: 578.08
Dividends reinvested/share: $6.81
Total return: -1.03%
Average annual return: -0.21%
Starting investment: $10,000.00
Ending investment: $9,895.38

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -0.21%. This would have turned a $10K investment made 5 years ago into $9,895.38 today (as of 05/29/2024). On a total return basis, that’s a result of -1.03% (something to think about: how might T shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that AT&T Inc paid investors a total of $6.81/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 1.11/share, we calculate that T has a current yield of approximately 6.48%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.11 against the original $24.06/share purchase price. This works out to a yield on cost of 26.93%.

More investment wisdom to ponder:
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Charlie Munger