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— Warren Buffett

A five-year holding period can be a useful test of whether an equity investment thesis is grounded in business performance rather than short-term market moves. That framework is especially relevant for ON Semiconductor Corp, now commonly branded as onsemi, whose shares have been shaped by semiconductor demand cycles, automotive and industrial end markets, and shifts in investor sentiment toward power and analog chip makers.

For an investor who committed $10,000 to ON Semiconductor (NASD: ON) on October 27, 2021 and simply held the position for the next five years, the result was a solid gain. Based on the price path shown below, that investment would have grown to $16,624.10 by October 26, 2026, representing a total return of 66.24% and an average annual return of 10.70%.

ON 5-Year Return Details

ON 5-Year Return Details
Start date:	10/27/2021	$10,000 10/27/2021   $16,624 10/26/2026
End date:	10/26/2026
Start price/share:	$44.55
End price/share:	$74.06
Starting shares:	224.47
Ending shares:	224.47
Dividends reinvested/share:	$0.00
Total return:	66.24%
Average annual return:	10.70%
Starting investment:	$10,000.00
Ending investment:	$16,624.10

What Drove the Return

The gain came entirely from share-price appreciation rather than income. ON does not show any dividends reinvested in the period above, so the return reflects the market value of the same 224.47 shares purchased at the outset. That distinction matters because it makes the result more directly tied to changes in the company’s earnings outlook, margins, capital allocation, and valuation multiple.

ON Semiconductor operates in areas of the chip market that are often associated with longer product cycles and mission-critical applications, particularly in automotive and industrial systems. The company has had significant exposure to power semiconductors, sensing, and energy-efficiency trends, all of which can support stronger pricing and a more differentiated product mix when execution is solid. At the same time, semiconductor stocks can be highly cyclical, and five-year returns often include both periods of optimism and resets in demand expectations.

How to Interpret a 10.70% Annualized Return

An average annual return of 10.70% is not the same as a simple one-year gain repeated evenly each year. It is a compounded rate that links the starting value of $10,000 to the ending value of $16,624.10 over the full holding period. In practical terms:

• $10,000 invested became $16,624.10
• The total gain was $6,624.10
• The total return was 66.24%
• No dividend income contributed to the outcome

That is a respectable result over a full market cycle, particularly for a stock exposed to an industry known for periodic volatility. It also illustrates why time horizon can matter more than interim price swings. A business can go through inventory corrections, multiple compression, or broader risk-off periods and still produce acceptable multi-year returns if operating performance ultimately improves.

Key Takeaways for Long-Term Holders

The five-year performance of ON Semiconductor highlights several points that are relevant when assessing semiconductor investments:

• Return composition matters. In ON’s case, the result came from capital appreciation rather than dividends.
• Holding period matters. A longer time frame can better capture the economics of product cycles, capacity investments, and end-market demand normalization.
• Cyclicality remains central. Even strong businesses in semiconductors are not insulated from shifts in inventory, pricing, or customer spending.
• Valuation discipline still matters. A good company can produce modest returns if bought at an aggressive multiple, while a more reasonable entry point can materially improve long-run outcomes.

Viewed in that context, ON’s five-year result was strong enough to reward patience, but not so extreme that it should be examined without regard to future business conditions. For the next five years, the core questions would center on demand durability in automotive and industrial markets, the company’s competitive position in power semiconductors and sensing, margin resilience through the cycle, and the valuation investors are willing to assign those earnings.

[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“Price is what you pay. Value is what you get.” — Warren Buffett