“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 Citizens Financial Group Inc (NYSE: CFG)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 09/03/2020 |
|
|||
| End date: | 09/02/2025 | ||||
| Start price/share: | $26.76 | ||||
| End price/share: | $51.60 | ||||
| Starting shares: | 373.69 | ||||
| Ending shares: | 464.96 | ||||
| Dividends reinvested/share: | $8.19 | ||||
| Total return: | 139.92% | ||||
| Average annual return: | 19.13% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $23,994.17 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 19.13%. This would have turned a $10K investment made 5 years ago into $23,994.17 today (as of 09/02/2025). On a total return basis, that’s a result of 139.92% (something to think about: how might CFG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Citizens Financial Group Inc paid investors a total of $8.19/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 1.68/share, we calculate that CFG has a current yield of approximately 3.26%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.68 against the original $26.76/share purchase price. This works out to a yield on cost of 12.18%.
More investment wisdom to ponder:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch
