“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 dividend stock delivered returns through both price movement and cash distributions. For Best Buy Inc (NYSE: BBY), a $10,000 investment made on 10/01/2021 grew to $10,577.91 by 09/30/2026, assuming all dividends were reinvested. That equates to a total return of 5.80% and an annualized return of 1.13%.
The result is notable because Best Buy’s share price declined over the period, falling from $105.31 to $88.24. The overall gain came from the contribution of dividends and the compounding effect of dividend reinvestment, which increased the share count materially over time.
BBY 5-Year Return Details
| Start date: | 10/01/2021 |
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| End date: | 09/30/2026 | ||||
| Start price/share: | $105.31 | ||||
| End price/share: | $88.24 | ||||
| Starting shares: | 94.96 | ||||
| Ending shares: | 119.90 | ||||
| Dividends reinvested/share: | $18.34 | ||||
| Total return: | 5.80% | ||||
| Average annual return: | 1.13% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $10,577.91 | ||||
The above figures indicate that a five-year investment in Best Buy produced only modest appreciation on a total-return basis. In dollar terms, the investment added $577.91 over five years. In annualized terms, the return was 1.13%, which underscores how a high-single-digit or low-double-digit dividend yield over time is not the same thing as a high total return if the underlying share price contracts.
What Drove the Return
The most important takeaway is that dividends did much of the work. Best Buy paid $18.34 per share in dividends over the period, and those dividends were assumed to be reinvested at the closing price on each ex-dividend date. That reinvestment increased the position from 94.96 shares to 119.90 shares by the end of the holding period.
Without reinvestment, the decline in the stock price from $105.31 to $88.24 would have had a significantly larger effect on ending value. With reinvestment, the investor accumulated more shares at lower prices along the way, partially offsetting the capital loss. This is a straightforward example of why total return analysis is more informative than price performance alone for dividend-paying stocks.
Best Buy Dividend Yield and Yield on Cost
Based upon the most recent annualized dividend rate of $3.84 per share, BBY has a current yield of approximately 4.35%. A related measure is yield on cost, which compares the current annualized dividend to the original purchase price rather than the current share price.
Using the original entry price of $105.31 per share, Best Buy’s current annualized dividend of $3.84 translates to a yield on cost of 4.13%. That metric helps illustrate how a dividend stream evolves relative to the initial investment, particularly for investors who focus on income growth over time.
Key Takeaways From the 5-Year BBY Investment
- Initial investment: $10,000.00
- Ending value: $10,577.91
- Total return with dividends reinvested: 5.80%
- Annualized return: 1.13%
- Share price change: down from $105.31 to $88.24
- Dividend reinvestment increased shares owned from 94.96 to 119.90
For Best Buy stock, the five-year result shows the distinction between income support and business-driven equity appreciation. Dividends helped preserve and modestly grow capital, but they did not overcome a weak share-price trajectory by a wide margin. That makes BBY a useful case study in evaluating retailer returns through a full-cycle lens: starting valuation, operating performance, dividend policy, and the role of reinvestment all matter.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more investment quote before you go:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban
