“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 how a dividend-paying stock performs through a full market cycle rather than over a short-term move. For Avery Dennison Corp (NYSE: AVY), the results over the past five years were negative even after accounting for dividend reinvestment. A $10,000 investment made on 08/30/2021 would have declined to $8,597.62 by 08/27/2026, based on the return figures below.
AVY 5-Year Return Summary
| Start date: | 08/30/2021 |
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| End date: | 08/27/2026 | ||||
| Start price/share: | $226.62 | ||||
| End price/share: | $178.34 | ||||
| Starting shares: | 44.13 | ||||
| Ending shares: | 48.21 | ||||
| Dividends reinvested/share: | $16.56 | ||||
| Total return: | -14.02% | ||||
| Average annual return: | -2.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $8,597.62 | ||||
The five-year total return for Avery Dennison was -14.02%, equal to an annualized return of -2.98%. In practical terms, that means the income stream from dividends was not sufficient to offset the decline in the share price over the period. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the Negative AVY Return?
The return breakdown is straightforward: Avery Dennison shares fell from $226.62 to $178.34 over the measurement period, while reinvested dividends increased the share count from 44.13 to 48.21. That additional share accumulation helped cushion the decline, but not enough to produce a positive total return.
This distinction matters. Price return and total return are not the same. For dividend stocks, total return captures both capital appreciation and cash distributions. In AVY’s case, dividends provided support, but the stock’s lower ending price remained the dominant factor.
Dividend Reinvestment and Yield on Cost
Over the past five years, Avery Dennison paid $16.56 per share in dividends. In the return calculation above, each dividend is assumed to be reinvested into additional AVY shares at the closing price on the ex-dividend date. That is why the ending share count rose to 48.21 from the initial 44.13 shares.
Using the most recent annualized dividend rate of $4.00 per share, AVY’s current yield works out to approximately 2.24% based on the ending share price of $178.34. Measured against the original purchase price of $226.62, the yield on cost is about 1.76%.
Key Takeaways From This 5-Year Holding Period
- A $10,000 investment in Avery Dennison fell to $8,597.62 over five years.
- The total return was -14.02%, including reinvested dividends.
- The annualized return was -2.98%.
- Dividend reinvestment increased the share count, but did not overcome the stock’s price decline.
- AVY’s current indicated dividend yield, based on the stated annualized dividend and ending price, is approximately 2.24%.
For long-term holders, the main lesson is that dividend income can mitigate weakness in share price performance, but it does not eliminate valuation risk or cyclical pressure. Over this five-year window, Avery Dennison generated income, yet the stock still produced a negative total return.
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger
