“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 rewarded patience through both price performance and reinvested income. For Baxter International Inc (NYSE: BAX), that test produced a sharply negative result over the period beginning in October 2021 and ending in October 2026. The figures below show how a $10,000 investment in Baxter stock performed, including dividends reinvested.
| Start date: | 10/05/2021 |
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| End date: | 10/02/2026 | ||||
| Start price/share: | $80.86 | ||||
| End price/share: | $23.49 | ||||
| Starting shares: | 123.67 | ||||
| Ending shares: | 136.43 | ||||
| Dividends reinvested/share: | $4.18 | ||||
| Total return: | -67.95% | ||||
| Average annual return: | -20.37% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $3,205.72 | ||||
Baxter International 5-Year Return at a Glance
A $10,000 investment in Baxter International on 10/05/2021 would have declined to $3,205.72 by 10/02/2026, assuming dividends were reinvested. That equates to a total return of -67.95% and an average annual return of -20.37%. These figures were computed using the Dividend Channel DRIP Returns Calculator.
The primary driver of that outcome was the stock price decline. Baxter shares fell from $80.86 to $23.49 over the period, a drop large enough that dividend reinvestment only modestly reduced the damage. Ending shares increased from 123.67 to 136.43 through reinvestment, but the additional shares were not enough to offset the magnitude of the capital loss.
What the Numbers Show
The return profile highlights an important distinction in total return analysis:
- Share price return captures the change in the stock’s market value.
- Dividend return adds the cash distributions paid during the holding period.
- Total return with reinvestment reflects both components and is typically the most complete measure of long-term performance.
In Baxter’s case, total dividends reinvested came to $4.18 per share over the five-year period. That income mattered, but it was overwhelmed by the steep decline in the share price. This is a useful reminder that dividend-paying stocks are not insulated from major drawdowns when earnings expectations, balance-sheet concerns, portfolio repositioning, or valuation compression pressure the equity.
Dividend Yield and Yield on Cost
Based on the most recent annualized dividend rate of $0.04 per share, BAX has a current yield of approximately 0.17%. Measured against the original purchase price of $80.86 per share, the current payout implies a yield on cost of roughly 0.21%.
Yield on cost can be informative, but in cases like this it should be interpreted carefully. A low current dividend relative to the original entry price underscores how little income support remains compared with the scale of the capital loss. When a company materially reduces its dividend, the income thesis can change as much as the valuation thesis.
Why Total Return Matters More Than Dividend Income Alone
For long-horizon investors, dividend reinvestment can be a powerful compounding tool when the underlying business remains stable and the share price trend is supportive. However, reinvestment is not a cure for a collapsing equity value. When a stock loses more than two-thirds of its value, even a consistent income stream usually plays a secondary role in the final result.
That is why total return analysis is often more revealing than looking only at headline dividend yield. A high or historically reliable payout does not by itself ensure satisfactory long-term performance. The durability of earnings, capital allocation, leverage, and the direction of the core business remain central to the investment outcome.
“The most important three words in investing is: “I don’t know.” If someone doesn’t say that to you then they are lying.” — James Altucher
