“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, fits squarely within the strategy of buying quality businesses and allowing compounding to work over time. In that context, how would such a strategy have worked out for an investment in Elevance Health Inc (NYSE: ELV), one of the largest U.S. health benefits companies? Below, we examine the outcome of a hypothetical five year investment in the stock initiated in 2021.
| Start date: | 04/14/2021 |
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| End date: | 04/13/2026 | ||||
| Start price/share: | $362.62 | ||||
| End price/share: | $316.07 | ||||
| Starting shares: | 27.58 | ||||
| Ending shares: | 29.60 | ||||
| Dividends reinvested/share: | $29.51 | ||||
| Total return: | -6.45% | ||||
| Average annual return: | -1.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,357.20 | ||||
As shown above, the five year investment result worked out poorly, with an annualized rate of return of -1.32%. This would have turned a $10K investment made five years ago into $9,357.20 today (as of 04/13/2026), assuming dividends were reinvested. On a total return basis, that is a result of -6.45% (something to think about: how might ELV shares perform over the next five years?). These figures also highlight the volatility that can accompany even large-cap, blue-chip names over a single five year window.
For context, over portions of this period Elevance Health (formerly known as Anthem, Inc. prior to its corporate rebranding and name change to Elevance Health, Inc. in 2022) operated through a mix of commercial and government-sponsored health plans, pharmacy benefit management, and affiliated health services. The company’s fundamentals — such as membership trends, medical cost ratios, and regulatory developments in Medicare and Medicaid — can all influence investor sentiment and share-price performance over time. However, as the numbers above illustrate, a solid operating profile does not always translate into strong equity returns over a specific holding period, particularly when starting valuations are full and macro conditions are shifting.
Notice that Elevance Health Inc paid investors a total of $29.51/share in dividends over the five year 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). In this example, dividend reinvestment increased the share count from 27.58 to 29.60 over five years, partially offsetting the impact of the lower share price at the end of the period.
Based upon the most recent annualized dividend rate of 6.88/share, we calculate that ELV has a current yield of approximately 2.18%. Another interesting datapoint we can examine is “yield on cost” — in other words, we can express the current annualized dividend of 6.88 against the original $362.62/share purchase price. This works out to a yield on cost of 0.60%. While the cash income profile has become more attractive for new shareholders over time, the original investor in this scenario has not yet benefited from substantial income growth relative to their purchase price.
It is also worth emphasizing what these figures do not capture. They do not reflect any taxes an investor might incur on dividends, nor do they include trading commissions or other frictions that could further reduce realized returns. In addition, the experience of a dollar-cost averaging investor, or one who bought on different dates, would likely differ meaningfully from the single-date, lump-sum investment modeled here. For investors applying a Buffett-style discipline, this type of analysis underscores the importance of entry valuation, business quality, and a truly long-duration time horizon.
More investment wisdom to ponder:
“Successful investing is anticipating the anticipations of others.” — John Maynard Keynes
For long-term shareholders and prospective investors alike, reviewing “what if” scenarios such as this can be a useful way to calibrate expectations around risk, reward, and the role that dividend reinvestment can play in total return, particularly in defensive sectors like health care where earnings may be more stable than share prices over a given five year stretch.
