“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 is often used to test whether a stock has created durable shareholder value through a full market cycle. For Baxter International Inc (NYSE: BAX), the result over the period beginning in August 2021 was sharply negative. Including dividend reinvestment, a $10,000 investment declined to $4,038.89 by 08/06/2026, highlighting how a large share-price drawdown can overwhelm the contribution from income.
BAX 5-Year Return Summary
| Start date: | 08/09/2021 |
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| End date: | 08/06/2026 | ||||
| Start price/share: | $74.00 | ||||
| End price/share: | $27.01 | ||||
| Starting shares: | 135.14 | ||||
| Ending shares: | 149.54 | ||||
| Dividends reinvested/share: | $4.45 | ||||
| Total return: | -59.61% | ||||
| Average annual return: | -16.60% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $4,038.89 | ||||
The numbers imply that capital loss, rather than dividend income, dominated the investment outcome. Even after reinvesting distributions and increasing the share count from 135.14 to 149.54, the decline in Baxter’s share price from $74.00 to $27.01 drove the portfolio value materially lower.
Put differently, the additional shares acquired through dividend reinvestment provided only limited offset against a steep contraction in the stock price. That is an important distinction in total-return analysis: reinvested dividends can meaningfully improve long-run outcomes, but they cannot fully compensate for a prolonged and substantial decline in the underlying equity.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the Weak 5-Year Return?
The most direct explanation is straightforward: Baxter International’s stock price fell by roughly 63.5% over the period, far more than dividend reinvestment could recover. For long-term shareholders, this underscores a basic principle of equity returns:
- Price return usually has the largest effect on total return over multi-year periods.
- Dividends matter most when they are sustained and meaningful relative to the purchase price.
- When a company’s dividend is very small, total return becomes even more dependent on valuation and business performance.
Baxter has historically operated in medical products and healthcare technology, areas that can attract investors seeking defensiveness. But a defensive industry classification does not guarantee a defensive equity outcome. Company-specific pressures, operational challenges, capital allocation decisions, and shifts in earnings expectations can all weigh heavily on valuation multiples and shareholder returns.
Dividend Impact and Yield on Cost
Dividends remain an important component of return analysis because they represent cash distributed to shareholders and, when reinvested, can compound over time. In this case, Baxter International paid a total of $4.45 per share over the five-year period examined above, and the calculation assumes those cash payments were reinvested using the closing price on each ex-dividend date.
Based on the most recent annualized dividend rate of $0.04 per share, BAX has a current yield of approximately 0.15% using the $27.01 ending share price. Measured against the original purchase price of $74.00, that same annualized dividend equates to a yield on cost of about 0.05%.
Yield on cost can be useful as a reference point, but it should not be confused with current income potential. For an investor evaluating BAX today, the more relevant figure is the current dividend yield based on the present market price and the sustainability of the dividend itself.
Key Takeaways From This BAX Investment Example
- A $10,000 investment in Baxter International in August 2021 fell to $4,038.89 by 08/06/2026 with dividends reinvested.
- The total return was -59.61%, equal to an average annual return of -16.60%.
- Dividend reinvestment increased the share count, but it did not come close to offsetting the stock’s price decline.
- The case illustrates why total return analysis should consider both income and capital appreciation, not dividend payments alone.
Multi-year return reviews such as this are most useful when they separate the sources of performance. In Baxter International’s case, the central conclusion is clear: the investment result since 2021 was driven overwhelmingly by share-price weakness, while dividends played only a modest supporting role.
One more investment quote to leave you with:
“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
