“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 can be a useful test of whether a stock has created durable shareholder value rather than merely benefited from short-term market momentum. For W.W. Grainger Inc. (NYSE: GWW), that test produced a strong result. A $10,000 investment made on 09/28/2021 would have grown to $32,428.12 by 09/25/2026, assuming dividends were reinvested.
That translates to a total return of 224.26% and an average annual return of 26.56%. The outcome reflects both substantial share price appreciation and the incremental benefit of dividend reinvestment over the period.
GWW 5-Year Return at a Glance
| Start date: | 09/28/2021 |
|
|||
| End date: | 09/25/2026 | ||||
| Start price/share: | $402.73 | ||||
| End price/share: | $1,243.07 | ||||
| Starting shares: | 24.83 | ||||
| Ending shares: | 26.09 | ||||
| Dividends reinvested/share: | $39.78 | ||||
| Total return: | 224.26% | ||||
| Average annual return: | 26.56% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $32,428.12 | ||||
The result is straightforward: over this five-year span, Grainger more than tripled the value of the original investment on a total return basis. The gain was driven primarily by stock price appreciation, with dividend reinvestment adding a smaller but still meaningful boost through an increased share count.
What Drove the Return
Grainger is a large industrial distributor focused on maintenance, repair, and operating products, along with related supply chain solutions. Businesses of this type are often evaluated on operating execution, pricing discipline, customer retention, and the resilience of demand across industrial, commercial, and institutional end markets. Over time, sustained gains in those areas can support both earnings growth and valuation expansion.
In this case, the starting share price was $402.73 and the ending share price was $1,243.07. That move accounts for most of the increase in portfolio value. Dividends then compounded the result by funding the purchase of additional shares, raising the position from 24.83 shares to 26.09 shares by the end of the period.
How Dividend Reinvestment Affected the Outcome
Dividend reinvestment matters most when it is applied consistently over long periods. In the calculation above, total dividends reinvested came to $39.78 per original share over the five years examined. Those cash distributions were assumed to be reinvested at the closing price on each ex-dividend date, which modestly increased the share count and amplified the ending value.
For investors comparing price return with total return, the distinction is important:
- Price return measures the change in the stock price alone.
- Total return includes both price appreciation and cash dividends.
- Reinvestment converts those dividends into additional shares, allowing future gains to compound on a larger base.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $9.96 per share, GWW has a current yield of approximately 0.80% using the ending share price shown above. That is a relatively modest current income yield, which underscores that the five-year result here was not primarily an income story. It was largely a capital appreciation story, supplemented by dividends.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price. Using the starting share price of $402.73, the yield on cost works out to about 2.47%. That figure is often helpful for understanding how dividend growth can improve the income generated by an initial investment over time, even if the stock’s current market yield remains comparatively low.
Key Takeaways
- $10,000 invested in W.W. Grainger on 09/28/2021 grew to $32,428.12 by 09/25/2026.
- Total return was 224.26%.
- Average annual return was 26.56%.
- Dividend reinvestment increased the share count from 24.83 to 26.09.
- Most of the total return came from share price appreciation, with dividends providing an additional compounding effect.
Strong historical performance does not, by itself, determine future returns. But the five-year record does illustrate an important point: when a business compounds value consistently, even a relatively modest starting dividend can contribute meaningfully to long-term total return when paired with substantial share price appreciation.
“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.” — Charlie Munger
