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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 FMC Corp. (NYSE: FMC)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 06/24/2019


End date: 06/21/2024
Start price/share: $81.81
End price/share: $56.39
Starting shares: 122.23
Ending shares: 135.98
Dividends reinvested/share: $10.08
Total return: -23.32%
Average annual return: -5.17%
Starting investment: $10,000.00
Ending investment: $7,669.94

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -5.17%. This would have turned a $10K investment made 5 years ago into $7,669.94 today (as of 06/21/2024). On a total return basis, that’s a result of -23.32% (something to think about: how might FMC shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that FMC Corp. paid investors a total of $10.08/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 2.32/share, we calculate that FMC has a current yield of approximately 4.11%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.32 against the original $81.81/share purchase price. This works out to a yield on cost of 5.02%.

More investment wisdom to ponder:
“The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.” — T. Boone Pickens