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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 Alliant Energy Corp (NASD: LNT)? Today, we examine the outcome of a five year investment into the stock back in 2019.

Start date: 12/11/2019
$10,000

12/11/2019
  $13,390

12/10/2024
End date: 12/10/2024
Start price/share: $53.04
End price/share: $60.70
Starting shares: 188.54
Ending shares: 220.55
Dividends reinvested/share: $8.58
Total return: 33.88%
Average annual return: 6.01%
Starting investment: $10,000.00
Ending investment: $13,390.71

The above analysis shows the five year investment result worked out well, with an annualized rate of return of 6.01%. This would have turned a $10K investment made 5 years ago into $13,390.71 today (as of 12/10/2024). On a total return basis, that’s a result of 33.88% (something to think about: how might LNT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Alliant Energy Corp paid investors a total of $8.58/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 1.92/share, we calculate that LNT has a current yield of approximately 3.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.92 against the original $53.04/share purchase price. This works out to a yield on cost of 5.96%.

One more piece of investment wisdom to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain