“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?
Today, let’s look backwards in time to 2021, and take a look at what happened to investors who asked that very question about US Bancorp (NYSE: USB), by taking a look at the investment outcome over a five year holding period.
| Start date: | 01/05/2021 |
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| End date: | 01/02/2026 | ||||
| Start price/share: | $46.27 | ||||
| End price/share: | $53.93 | ||||
| Starting shares: | 216.12 | ||||
| Ending shares: | 267.47 | ||||
| Dividends reinvested/share: | $9.59 | ||||
| Total return: | 44.25% | ||||
| Average annual return: | 7.61% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,424.10 | ||||
The above analysis shows the five year investment result worked out well, with an annualized rate of return of 7.61%. This would have turned a $10K investment made 5 years ago into $14,424.10 today (as of 01/02/2026). On a total return basis, that’s a result of 44.25% (something to think about: how might USB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that US Bancorp paid investors a total of $9.59/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 2.08/share, we calculate that USB has a current yield of approximately 3.86%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.08 against the original $46.27/share purchase price. This works out to a yield on cost of 8.34%.
One more investment quote to leave you with:
“I make no attempt to forecast the market; my efforts are devoted to finding undervalued securities.” — Warren Buffett
