“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 is a useful test of whether a stock’s dividends, business durability, and valuation can offset normal market volatility. For International Paper Co (NYSE: IP), the result over the most recent five-year period was negative on a total return basis, even after reinvesting dividends. That makes IP a clear example of how income can cushion a decline, but not always fully overcome a weaker share price outcome.
Using Dividend Channel’s DRIP framework, a $10,000 investment in International Paper made on 08/24/2021 would have been worth $9,301.18 as of 08/21/2026. The position produced a total return of -6.98%, equivalent to an average annual return of -1.44%, assuming dividends were reinvested on the closing price on each ex-dividend date.
International Paper 5-Year Return Details
| Start date: | 08/24/2021 |
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| End date: | 08/21/2026 | ||||
| Start price/share: | $55.79 | ||||
| End price/share: | $41.49 | ||||
| Starting shares: | 179.24 | ||||
| Ending shares: | 224.21 | ||||
| Dividends reinvested/share: | $9.26 | ||||
| Total return: | -6.98% | ||||
| Average annual return: | -1.44% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,301.18 | ||||
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the Negative Total Return?
The core reason for the weak five-year result was capital depreciation. International Paper shares fell from $55.79 to $41.49 over the period, a decline of roughly 25.6%. Dividend reinvestment helped offset part of that drop by increasing the share count from 179.24 to 224.21, but the additional shares were not enough to fully make up for the lower ending stock price.
This is an important distinction in analyzing dividend stocks. A high payout can support total return, particularly when distributions are reinvested at lower prices. But when the underlying equity loses enough value, income alone may not be sufficient to produce a positive result over a medium-term holding period.
How Dividend Reinvestment Changed the Outcome
International Paper paid a cumulative $9.26 per share in dividends during the holding period. Reinvesting those cash distributions increased the investor’s ownership stake over time, lifting the share count by about 25% from the original purchase level.
In practical terms, dividend reinvestment mattered in two ways:
- It converted cash income into additional shares.
- It partially reduced the damage from the stock’s price decline.
- It improved the ending value relative to a price-only view of the investment.
That said, reinvestment is not a cure-all. It works best when a company combines meaningful cash distributions with stable or improving business value over time. When valuation compresses or earnings expectations weaken, the contribution from dividends can be overwhelmed by a falling share price.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.85 per share, IP has a current yield of approximately 4.46% using the $41.49 ending share price. Measured against the original purchase price of $55.79, that same dividend rate implies a yield on cost of about 3.32%.
Yield on cost can be a useful reference point for long-term holders because it shows how today’s dividend stream compares with the initial entry price. However, it should not be confused with current yield, which reflects the income available relative to the stock’s present market value.
Key Takeaways From International Paper’s 5-Year Performance
- A $10,000 buy-and-hold investment in International Paper declined to $9,301.18 over five years.
- Total return was -6.98%, or -1.44% annualized, assuming dividend reinvestment.
- Dividends provided meaningful support, with $9.26 per share paid over the period.
- The negative result was driven primarily by the stock’s lower ending price.
- The case illustrates why dividend analysis should always be paired with share price and total return analysis.
For investors evaluating International Paper, the five-year record underscores a straightforward point: dividend income matters, but total return remains the decisive measure of long-term results. In IP’s case, reinvested dividends softened the decline, yet did not fully offset the stock’s capital loss.
Here’s one more investment observation worth keeping in mind:
“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.” — Warren Buffett
