“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 Eversource Energy (NYSE: ES)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 04/14/2020 |
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| End date: | 04/11/2025 | ||||
| Start price/share: | $91.40 | ||||
| End price/share: | $56.32 | ||||
| Starting shares: | 109.41 | ||||
| Ending shares: | 130.83 | ||||
| Dividends reinvested/share: | $12.98 | ||||
| Total return: | -26.32% | ||||
| Average annual return: | -5.93% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $7,368.88 | ||||
As shown above, the five year investment result worked out poorly, with an annualized rate of return of -5.93%. This would have turned a $10K investment made 5 years ago into $7,368.88 today (as of 04/11/2025). On a total return basis, that’s a result of -26.32% (something to think about: how might ES shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Eversource Energy paid investors a total of $12.98/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 3.01/share, we calculate that ES has a current yield of approximately 5.34%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.01 against the original $91.40/share purchase price. This works out to a yield on cost of 5.84%.
Another great investment quote to think about:
“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.” — Charlie Munger
