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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 Sherwin-Williams Co (NYSE: SHW), by taking a look at the investment outcome over a five year holding period.

Start date: 05/30/2019


End date: 05/29/2024
Start price/share: $141.52
End price/share: $297.43
Starting shares: 70.66
Ending shares: 73.88
Dividends reinvested/share: $10.99
Total return: 119.74%
Average annual return: 17.04%
Starting investment: $10,000.00
Ending investment: $21,971.45

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 17.04%. This would have turned a $10K investment made 5 years ago into $21,971.45 today (as of 05/29/2024). On a total return basis, that’s a result of 119.74% (something to think about: how might SHW shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Sherwin-Williams Co paid investors a total of $10.99/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 2.86/share, we calculate that SHW has a current yield of approximately 0.96%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.86 against the original $141.52/share purchase price. This works out to a yield on cost of 0.68%.

Another great investment quote to think about:
“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” — Peter Lynch