“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
A five-year holding period offers a useful test of how a dividend-paying consumer staples stock compounds shareholder returns over time. For Hershey Company (NYSE: HSY), a $10,000 investment made on 05/18/2021 and held through 05/15/2026 grew to $12,298.87 with dividends reinvested, according to the figures below. That equates to a total return of 22.99% and an annualized return of 4.23%.
HSY 5-Year Return Details
| Start date: | 05/18/2021 |
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| End date: | 05/15/2026 | ||||
| Start price/share: | $172.79 | ||||
| End price/share: | $186.98 | ||||
| Starting shares: | 57.87 | ||||
| Ending shares: | 65.78 | ||||
| Dividends reinvested/share: | $24.80 | ||||
| Total return: | 22.99% | ||||
| Average annual return: | 4.23% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $12,298.87 | ||||
The result reflects both moderate share-price appreciation and the cumulative effect of reinvested dividends. Hershey’s share price rose from $172.79 to $186.98 over the period, but the total-return outcome was supported meaningfully by cash distributions that were assumed to be reinvested into additional shares.
What Drove Hershey’s Five-Year Return?
For a company such as Hershey, total return is often best understood through three components:
- Share-price change: HSY appreciated by $14.19 per share over the period.
- Dividend income: Shareholders received $24.80 per share in dividends over five years.
- Dividend reinvestment: Reinvesting those dividends increased the share count from 57.87 to 65.78 shares.
This framework matters because a stock with modest price appreciation can still generate a respectable overall result when it combines durable cash flows with regular capital returns. That dynamic is often central to long-term performance in the consumer staples sector, where earnings growth is typically steadier than spectacular.
The figures above were computed with the Dividend Channel DRIP Returns Calculator, using the closing price on each ex-dividend date for reinvestment calculations.
Dividend Yield and Yield on Cost
Based on the most recent annualized dividend rate of $5.808 per share, HSY has a current yield of approximately 3.11% using the ending share price of $186.98.
Another commonly used measure is yield on cost, which compares the current annual dividend to the original purchase price. Using the 2021 entry price of $172.79 per share, Hershey’s current annualized dividend implies a yield on cost of about 3.36%.
That distinction is useful:
- Current yield shows what a new buyer earns at today’s price.
- Yield on cost shows how the income stream has grown relative to the original purchase price.
How to Interpret the Result
A 22.99% total return over five years is positive, but not exceptional in absolute terms. The more important takeaway is the character of the return. Hershey has historically been viewed as a defensive business, supported by established brands, recurring consumer demand, and a long record of dividend payments. In that context, a mid-single-digit annualized return may be evaluated less as a high-growth outcome and more as an example of how a lower-volatility, income-producing stock can compound capital over a full market cycle.
That also helps explain why dividend reinvestment matters disproportionately in businesses with steady but not explosive share-price gains. When capital appreciation is moderate, reinvested cash distributions can account for a substantial share of the ending value.
At a Glance
- Initial investment: $10,000 on 05/18/2021
- Ending value: $12,298.87 on 05/15/2026
- Total return: 22.99%
- Annualized return: 4.23%
- Total dividends paid per share: $24.80
- Share count with reinvestment: 57.87 to 65.78
“Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.” — Seth Klarman
