“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 Kimberly-Clark Corp. (NYSE: KMB)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 03/03/2020 |
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| End date: | 02/28/2025 | ||||
| Start price/share: | $140.79 | ||||
| End price/share: | $142.01 | ||||
| Starting shares: | 71.03 | ||||
| Ending shares: | 84.43 | ||||
| Dividends reinvested/share: | $23.08 | ||||
| Total return: | 19.90% | ||||
| Average annual return: | 3.70% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,989.67 | ||||
As we can see, the five year investment result worked out as follows, with an annualized rate of return of 3.70%. This would have turned a $10K investment made 5 years ago into $11,989.67 today (as of 02/28/2025). On a total return basis, that’s a result of 19.90% (something to think about: how might KMB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Kimberly-Clark Corp. paid investors a total of $23.08/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 5.04/share, we calculate that KMB has a current yield of approximately 3.55%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.04 against the original $140.79/share purchase price. This works out to a yield on cost of 2.52%.
One more piece of investment wisdom to leave you with:
“Be fearful when others are greedy; be greedy when others are fearful.” — Warren Buffett
