“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
A critical pearl of wisdom from Warren Buffett teaches that with any potential stock investment, as soon as a buy order is filled an investor faces a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).
The reality of this choice forces us to challenge our conviction in any company we consider owning, and to keep our eyes on the long-term time horizon. The market may move unpredictably in the interim, but over a five-year holding period the more relevant question becomes: will the investment succeed on a total-return basis?
Back in 2021, investors may have been asking themselves that very question about Host Hotels & Resorts Inc (NASD: HST), the largest lodging real estate investment trust (REIT) in the S&P 500, with a portfolio concentrated in upscale and luxury hotel properties operated under brands such as Marriott, Ritz-Carlton, and Hyatt. The company’s cash flows are closely tied to trends in business travel, group meetings, and leisure demand, all of which were in a recovery phase following the initial COVID-19 shock.
With that backdrop, let us examine what would have happened over a five-year holding period had you invested in HST shares back in 2021 and held on, reinvesting all dividends along the way.
| Start date: | 03/09/2021 |
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| End date: | 03/06/2026 | ||||
| Start price/share: | $16.45 | ||||
| End price/share: | $19.23 | ||||
| Starting shares: | 607.90 | ||||
| Ending shares: | 735.19 | ||||
| Dividends reinvested/share: | $3.28 | ||||
| Total return: | 41.38% | ||||
| Average annual return: | 7.18% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,138.51 | ||||
As shown above, the five-year investment result worked out favorably, with an annualized rate of return of 7.18%. This would have turned a $10,000 investment made five years ago into $14,138.51 today (as of 03/06/2026), assuming all dividends were reinvested. On a total return basis, that is a gain of 41.38%.
For context, this performance spans a period that included the reopening of global travel, elevated inflation, and a sharp rise in interest rates — all important factors for a lodging REIT whose revenues depend on room rates and occupancy, and whose valuation is sensitive to the cost of capital.
Notice that Host Hotels & Resorts Inc paid investors a total of $3.28 per share in dividends over the five-year holding period, providing a second component of the total return beyond share price change alone. For equity income investors, this illustrates a core feature of the REIT structure: in exchange for favorable tax treatment at the corporate level, REITs generally distribute a large portion of their taxable income as dividends.
Much like watering a tree, reinvesting dividends can help an investment grow over time. For the above calculations we assume dividend reinvestment, and for this exercise the closing price on the ex-dividend date is used for the reinvestment of each dividend. The increase in share count from 607.90 to 735.19 shares reflects this compounding effect.
Based upon the most recent annualized dividend rate of $0.80 per share, we calculate that HST has a current yield of approximately 4.16%, a level that may appeal to income-oriented investors in a lower-rate environment and that also provides a buffer to total return if price appreciation is modest.
Another useful metric to examine is “yield on cost” — in other words, expressing the current annualized dividend of $0.80 against the original $16.45 per share purchase price. This works out to a yield on cost of 4.86%. While that figure will differ from the current market yield, it helps long-term investors evaluate how their income stream has evolved relative to the capital originally committed.
Ultimately, the HST example underscores several enduring themes for REIT and equity investors alike: the importance of staying invested through cycles, the material role of dividends in total return, and the potential benefits of disciplined reinvestment policies. Looking ahead, the next five years for Host Hotels & Resorts will likely hinge on the trajectory of corporate travel, group demand, and interest-rate policy — all key variables to monitor when assessing the risk/return trade-off.
Another investment quote to consider:
“The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.” — Bruce Kovner
