“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 Principal Financial Group Inc (NASD: PFG)? Today, we examine the outcome of a five year investment into the stock back in 2021.
| Start date: | 01/29/2021 |
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| End date: | 01/28/2026 | ||||
| Start price/share: | $49.27 | ||||
| End price/share: | $94.05 | ||||
| Starting shares: | 202.96 | ||||
| Ending shares: | 243.07 | ||||
| Dividends reinvested/share: | $13.53 | ||||
| Total return: | 128.60% | ||||
| Average annual return: | 17.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $22,858.20 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 17.98%. This would have turned a $10K investment made 5 years ago into $22,858.20 today (as of 01/28/2026). On a total return basis, that’s a result of 128.60% (something to think about: how might PFG shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Principal Financial Group Inc paid investors a total of $13.53/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 3.16/share, we calculate that PFG has a current yield of approximately 3.36%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.16 against the original $49.27/share purchase price. This works out to a yield on cost of 6.82%.
Another great investment quote to think about:
“You can’t be a good value investor without being an independent thinker; you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do.” — Joel Greenblatt
