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

Start date: 05/16/2019


End date: 05/15/2024
Start price/share: $136.96
End price/share: $96.51
Starting shares: 73.01
Ending shares: 84.11
Dividends reinvested/share: $15.23
Total return: -18.82%
Average annual return: -4.08%
Starting investment: $10,000.00
Ending investment: $8,118.88

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -4.08%. This would have turned a $10K investment made 5 years ago into $8,118.88 today (as of 05/15/2024). On a total return basis, that’s a result of -18.82% (something to think about: how might IFF shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that International Flavors & Fragrances Inc. paid investors a total of $15.23/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 1.6/share, we calculate that IFF has a current yield of approximately 1.66%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.6 against the original $136.96/share purchase price. This works out to a yield on cost of 1.21%.

Another great investment quote to think about:
“Smart investing doesn’t consist of buying good assets but of buying assets well. This is a very, very important distinction that very, very few people understand.” — Howard Marks