“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 Union Pacific Corp (NYSE: UNP)? Today, we examine the outcome of a five year investment into the stock back in 2021.
| Start date: | 01/25/2021 |
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| End date: | 01/22/2026 | ||||
| Start price/share: | $206.46 | ||||
| End price/share: | $231.37 | ||||
| Starting shares: | 48.44 | ||||
| Ending shares: | 54.12 | ||||
| Dividends reinvested/share: | $25.29 | ||||
| Total return: | 25.21% | ||||
| Average annual return: | 4.60% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $12,518.47 | ||||
The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 4.60%. This would have turned a $10K investment made 5 years ago into $12,518.47 today (as of 01/22/2026). On a total return basis, that’s a result of 25.21% (something to think about: how might UNP shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Union Pacific Corp paid investors a total of $25.29/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 5.52/share, we calculate that UNP has a current yield of approximately 2.39%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.52 against the original $206.46/share purchase price. This works out to a yield on cost of 1.16%.
Another great investment quote to think about:
“All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” — Peter Lynch
