“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 Hasbro, Inc. (NASD: HAS)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 11/06/2019 |
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| End date: | 11/05/2024 | ||||
| Start price/share: | $94.86 | ||||
| End price/share: | $66.96 | ||||
| Starting shares: | 105.42 | ||||
| Ending shares: | 126.44 | ||||
| Dividends reinvested/share: | $13.12 | ||||
| Total return: | -15.34% | ||||
| Average annual return: | -3.27% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $8,467.72 | ||||
The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -3.27%. This would have turned a $10K investment made 5 years ago into $8,467.72 today (as of 11/05/2024). On a total return basis, that’s a result of -15.34% (something to think about: how might HAS shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Hasbro, Inc. paid investors a total of $13.12/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 2.8/share, we calculate that HAS has a current yield of approximately 4.18%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.8 against the original $94.86/share purchase price. This works out to a yield on cost of 4.41%.
Another great investment quote to think about:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger
