“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 Walt Disney Co. (NYSE: DIS)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 03/17/2020 |
|
|||
| End date: | 03/14/2025 | ||||
| Start price/share: | $93.53 | ||||
| End price/share: | $98.64 | ||||
| Starting shares: | 106.92 | ||||
| Ending shares: | 108.24 | ||||
| Dividends reinvested/share: | $1.25 | ||||
| Total return: | 6.77% | ||||
| Average annual return: | 1.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,676.89 | ||||
The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 1.32%. This would have turned a $10K investment made 5 years ago into $10,676.89 today (as of 03/14/2025). On a total return basis, that’s a result of 6.77% (something to think about: how might DIS shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Walt Disney Co. paid investors a total of $1.25/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/share, we calculate that DIS has a current yield of approximately 1.01%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $93.53/share purchase price. This works out to a yield on cost of 1.08%.
Another great investment quote to think about:
“Cash is a fact, profit is an opinion.” — Alfred Rappaport
