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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 Ross Stores Inc (NASD: ROST)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 06/04/2019


End date: 06/03/2024
Start price/share: $94.64
End price/share: $141.22
Starting shares: 105.66
Ending shares: 110.92
Dividends reinvested/share: $5.14
Total return: 56.64%
Average annual return: 9.39%
Starting investment: $10,000.00
Ending investment: $15,667.33

The above analysis shows the five year investment result worked out well, with an annualized rate of return of 9.39%. This would have turned a $10K investment made 5 years ago into $15,667.33 today (as of 06/03/2024). On a total return basis, that’s a result of 56.64% (something to think about: how might ROST shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Ross Stores Inc paid investors a total of $5.14/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 1.47/share, we calculate that ROST has a current yield of approximately 1.04%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.47 against the original $94.64/share purchase price. This works out to a yield on cost of 1.10%.

Another great investment quote to think about:
“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently.” — Jack Bogle