“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 Target Corp (NYSE: TGT)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 04/22/2020 |
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| End date: | 04/21/2025 | ||||
| Start price/share: | $106.84 | ||||
| End price/share: | $93.78 | ||||
| Starting shares: | 93.60 | ||||
| Ending shares: | 105.49 | ||||
| Dividends reinvested/share: | $19.06 | ||||
| Total return: | -1.07% | ||||
| Average annual return: | -0.22% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,890.48 | ||||
The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -0.22%. This would have turned a $10K investment made 5 years ago into $9,890.48 today (as of 04/21/2025). On a total return basis, that’s a result of -1.07% (something to think about: how might TGT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Target Corp paid investors a total of $19.06/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 4.48/share, we calculate that TGT has a current yield of approximately 4.78%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.48 against the original $106.84/share purchase price. This works out to a yield on cost of 4.47%.
Here’s one more great investment quote before you go:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham
