“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?
Today, let’s look backwards in time to 2020, and take a look at what happened to investors who asked that very question about Apple Inc (NASD: AAPL), by taking a look at the investment outcome over a five year holding period.
| Start date: | 11/18/2020 |
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| End date: | 11/17/2025 | ||||
| Start price/share: | $118.03 | ||||
| End price/share: | $267.46 | ||||
| Starting shares: | 84.72 | ||||
| Ending shares: | 87.03 | ||||
| Dividends reinvested/share: | $4.75 | ||||
| Total return: | 132.76% | ||||
| Average annual return: | 18.41% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $23,277.80 | ||||
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 18.41%. This would have turned a $10K investment made 5 years ago into $23,277.80 today (as of 11/17/2025). On a total return basis, that’s a result of 132.76% (something to think about: how might AAPL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Apple Inc paid investors a total of $4.75/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 1.04/share, we calculate that AAPL has a current yield of approximately 0.39%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.04 against the original $118.03/share purchase price. This works out to a yield on cost of 0.33%.
Here’s one more great investment quote before you go:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” — Warren Buffett
