“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
One of the most important lessons investors can draw from Warren Buffett is how to think about time horizon when evaluating an equity investment. Immediately after buying shares, investors can monitor the market value tick-by-tick. Some days the stock market will be up, other days down, and the constant flow of information can encourage short-term thinking.
For long-term, fundamentals-driven investors, those daily fluctuations are largely noise. The more relevant question is what a disciplined investor would have earned by simply holding through the market’s ups and downs over a full cycle.
In that spirit, consider the experience of an investor who purchased Hewlett Packard Enterprise Co (NYSE: HPE) in early 2021, reinvested all dividends, and held the position for five years.
Five-Year Performance Snapshot for HPE
| Start date: | 03/23/2021 |
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| End date: | 03/20/2026 | ||||
| Start price/share: | $14.76 | ||||
| End price/share: | $21.69 | ||||
| Starting shares: | 677.51 | ||||
| Ending shares: | 778.35 | ||||
| Dividends reinvested/share: | $2.38 | ||||
| Total return: | 68.82% | ||||
| Average annual return: | 11.05% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,878.87 | ||||
The above analysis shows that the five-year holding period in Hewlett Packard Enterprise resulted in an annualized rate of return of 11.05%. With dividends reinvested, a $10,000 investment made five years ago grew to $16,878.87 as of 03/20/2026. On a total return basis, that is a gain of 68.82%.
For context, that performance is broadly in line with what investors might hope to earn from equities over a full cycle, and it illustrates the power of allowing a long-term thesis to play out without reacting to short-term volatility. It also highlights the importance of dividends in the total return profile of mature technology companies.
The Role of Dividends and Reinvestment
Always an important consideration with a dividend-paying company is whether to reinvest dividends. Over the past five years, Hewlett Packard Enterprise Co has paid $2.38 per share in dividends. In the above calculations, all dividends are assumed to be reinvested into additional shares of HPE.
Dividend reinvestment increases the share count over time: the position grew from 677.51 shares initially to 778.35 shares by March 2026. Each subsequent dividend payment, therefore, is received on a larger base of shares. In this analysis, reinvestment is performed using the closing price on the ex-dividend date for each distribution, as modeled by the Dividend Channel DRIP Returns Calculator.
Without reinvestment, investors would still have received the same cash flows, but the ending account value would typically be lower because the compounding effect of buying additional shares would be absent. For long-term income-oriented investors who do not need current cash flow, reinvesting can be a meaningful driver of total return.
Current Yield Versus Yield on Cost
Based upon the most recent annualized dividend rate of $0.57 per share, we calculate that HPE has a current yield of approximately 2.63%. That figure is derived by dividing the current annualized dividend by the prevailing share price.
Another useful lens is “yield on cost” — the current annualized dividend expressed as a percentage of the original purchase price. In this case, the original investment was made at $14.76 per share, and HPE now pays $0.57 per share annually. This equates to a yield on cost of 3.86%.
Yield on cost can help investors visualize how income from a long-held position has grown relative to the initial outlay. It is not a substitute for evaluating the stock on its current fundamentals and forward yield, but it does illustrate how a stable or rising dividend can become a more significant income stream over time if the underlying business continues to generate sufficient cash flow.
Business and Market Backdrop Over the Period
During the 2021–2026 period, HPE continued to execute on its strategy of shifting from predominantly hardware-centric revenues toward a more recurring, as-a-service model across hybrid cloud, networking, storage, and high-performance computing.
Key themes that influenced the stock’s performance over those years included:
- Ongoing enterprise demand for hybrid cloud architectures, with customers balancing on-premises and public cloud workloads.
- Growth in data-intensive applications, artificial intelligence, and edge computing, which supported demand for HPE’s compute and networking offerings.
- Capital returns to shareholders via dividends and share repurchases, underpinned by the company’s cash generation and disciplined balance sheet management.
- Macro headwinds at various points in the period, including rising interest rates, inflation concerns, and volatility in enterprise IT spending, which contributed to fluctuations in the share price even as the long-term thesis played out.
For income-focused investors, HPE has generally been positioned as a value-oriented, dividend-paying technology name rather than a high-growth, high-multiple stock. The 11.05% annualized return over this five-year period reflects a combination of moderate price appreciation and a consistently paid dividend.
Looking Ahead: What the Next Five Years Could Require
The historical return profile raises an obvious question: how might HPE shares perform over the next five years? While the past cannot predict the future, several factors are likely to be important drivers of future returns:
- Earnings growth and margin progression: Sustained profitability from higher-value software and services, as well as disciplined cost control, will be central to supporting both dividends and potential capital appreciation.
- Competitive positioning in hybrid cloud and AI: The company’s ability to maintain relevance amid competition from large public cloud providers and other infrastructure vendors will influence revenue durability.
- Capital allocation: Management’s choices around reinvestment, acquisitions, share repurchases, and dividend policy will shape the return profile available to equity holders.
- Macro environment and rates: Interest rate levels, corporate IT spending cycles, and broader risk appetite in equity markets will affect valuation multiples applied to HPE’s earnings.
For investors applying a Buffett-style multi-year horizon, the emphasis will remain on assessing business quality, competitive advantages, balance sheet strength, and management discipline, rather than attempting to trade short-term news flow.
Long-Term Investing and the Noise Filter
The HPE example underscores a broader principle: long-term outcomes are often the product of a few key variables — purchase price, earnings growth, dividend policy, and time in the market. Short-term volatility, while uncomfortable, rarely determines the ultimate result for patient investors who focus on fundamentals.
More investment wisdom to ponder:
“Based on my own personal experience, both as an investor in recent years and an expert witness in years past, rarely do more than three or four variables really count. Everything else is noise.” — Martin Whitman
The performance data discussed above are hypothetical back-tested calculations based on historical prices and dividends for Hewlett Packard Enterprise Co over the stated period and assume dividend reinvestment with no taxes, fees, or transaction costs. Past performance is not indicative of future results, and this analysis is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
