“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
A five-year holding period can reveal whether a stock has rewarded patience through a combination of share-price appreciation, dividends, and dividend reinvestment. For AFL, the results over the period beginning in May 2021 were notably strong. A $10,000 investment in Aflac Inc on 05/04/2021 would have grown to $23,060.73 by 05/01/2026, assuming dividends were reinvested.
That outcome translates to a total return of 130.57% and an average annual return of 18.21%. The exercise offers a useful case study in how a steady dividend payer can compound value over time, especially when reinvestment adds to the share count during the holding period.
AFL Five-Year Return at a Glance
| Start date: | 05/04/2021 |
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| End date: | 05/01/2026 | ||||
| Start price/share: | $54.89 | ||||
| End price/share: | $112.88 | ||||
| Starting shares: | 182.18 | ||||
| Ending shares: | 204.26 | ||||
| Dividends reinvested/share: | $9.20 | ||||
| Total return: | 130.57% | ||||
| Average annual return: | 18.21% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $23,060.73 | ||||
The headline figure is straightforward: $10,000 became $23,060.73 over roughly five years. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.] Just as important, however, is how that return was generated. AFL delivered gains through both a higher share price and a growing share count from reinvested dividends.
How Dividend Reinvestment Changed the Outcome
Dividend reinvestment is a meaningful part of the AFL total return story. Over the period, Aflac paid $9.20 per share in dividends, and the calculation assumes each payment was reinvested at the closing price on the ex-dividend date. That process increased the investor’s share count from 182.18 shares to 204.26 shares.
In practical terms, reinvestment added more than 22 shares over the five-year span. Those additional shares then participated in the stock’s subsequent price appreciation, which is why total return exceeds the result that would come from price appreciation alone.
For dividend-paying stocks, this distinction matters:
- Price return measures only the change in the stock price.
- Total return includes dividends received.
- Total return with reinvestment adds the compounding effect of buying additional shares over time.
AFL Yield, Income, and Yield on Cost
Based on the most recent annualized dividend rate of $2.44 per share, AFL has a current yield of approximately 2.16% using the ending share price of $112.88. Another useful metric is yield on cost, which compares the current annual dividend against the original purchase price rather than the current market price.
Using the initial purchase price of $54.89 per share, the current annualized dividend implies a yield on cost of 3.94%. That does not change the stock’s present market yield, but it does show how income generation can improve over time for investors who establish a position at lower prices and hold through dividend increases.
What the Five-Year AFL Return Suggests
A five-year return of this magnitude usually reflects more than one favorable factor. In Aflac’s case, the combination of a rising stock price, ongoing dividend payments, and reinvestment worked together to produce a strong compounding result. The gain also highlights an important point about dividend stocks: even when current yield is moderate rather than high, long-term total return can still be substantial if the underlying business continues to support earnings, capital returns, and valuation improvement.
That said, historical returns should be read carefully. A strong trailing result can come from a rerating in valuation, improved operating expectations, or a favorable starting entry point. Looking ahead, the next five years will depend on a different set of variables, including underwriting performance, investment income trends, currency effects, capital deployment, and the path of dividend growth.
Key Takeaways
- A $10,000 investment in Aflac on 05/04/2021 grew to $23,060.73 by 05/01/2026.
- The total return was 130.57%, with an average annual return of 18.21%.
- Dividend reinvestment increased the share count from 182.18 to 204.26 shares.
- At a current annualized dividend of $2.44 per share, AFL’s indicated yield is about 2.16%.
- Based on the original purchase price, yield on cost works out to 3.94%.
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
