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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 Waste Management, Inc. (NYSE: WM)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 06/18/2019


End date: 06/17/2024
Start price/share: $113.90
End price/share: $206.38
Starting shares: 87.80
Ending shares: 95.56
Dividends reinvested/share: $12.41
Total return: 97.22%
Average annual return: 14.54%
Starting investment: $10,000.00
Ending investment: $19,721.84

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 14.54%. This would have turned a $10K investment made 5 years ago into $19,721.84 today (as of 06/17/2024). On a total return basis, that’s a result of 97.22% (something to think about: how might WM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Waste Management, Inc. paid investors a total of $12.41/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 3/share, we calculate that WM has a current yield of approximately 1.45%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3 against the original $113.90/share purchase price. This works out to a yield on cost of 1.27%.

One more piece of investment wisdom to leave you with:
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” — George Soros