“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, would fit right into the strategy. How would such a strategy have worked out for an investment into Hasbro, Inc. (NASD: HAS)? Today, we examine the outcome of a five year investment into the stock back in 2019.
| Start date: | 08/13/2019 |
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| End date: | 08/12/2024 | ||||
| Start price/share: | $116.25 | ||||
| End price/share: | $63.09 | ||||
| Starting shares: | 86.02 | ||||
| Ending shares: | 102.81 | ||||
| Dividends reinvested/share: | $13.10 | ||||
| Total return: | -35.14% | ||||
| Average annual return: | -8.29% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $6,486.05 | ||||
The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -8.29%. This would have turned a $10K investment made 5 years ago into $6,486.05 today (as of 08/12/2024). On a total return basis, that’s a result of -35.14% (something to think about: how might HAS shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Hasbro, Inc. paid investors a total of $13.10/share in dividends over the 5 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).
Based upon the most recent annualized dividend rate of 2.8/share, we calculate that HAS has a current yield of approximately 4.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.8 against the original $116.25/share purchase price. This works out to a yield on cost of 3.82%.
One more piece of investment wisdom to leave you with:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett
