“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 Salesforce Inc (NYSE: CRM)? Today, we examine the outcome of a five year investment into the stock back in 2020.
| Start date: | 12/21/2020 |
|
|||
| End date: | 12/18/2025 | ||||
| Start price/share: | $226.47 | ||||
| End price/share: | $257.85 | ||||
| Starting shares: | 44.16 | ||||
| Ending shares: | 44.70 | ||||
| Dividends reinvested/share: | $3.26 | ||||
| Total return: | 15.26% | ||||
| Average annual return: | 2.88% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $11,523.57 | ||||
The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 2.88%. This would have turned a $10K investment made 5 years ago into $11,523.57 today (as of 12/18/2025). On a total return basis, that’s a result of 15.26% (something to think about: how might CRM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Salesforce Inc paid investors a total of $3.26/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 1.664/share, we calculate that CRM has a current yield of approximately 0.65%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.664 against the original $226.47/share purchase price. This works out to a yield on cost of 0.29%.
One more piece of investment wisdom to leave you with:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis
