“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 has created value through both price performance and income. For Kraft Heinz Co (NYSE: KHC), that test has been challenging. A $10,000 investment made on 10/05/2021 would have declined in value by 10/02/2026 even after including reinvested dividends, illustrating that a high payout does not necessarily offset weak share-price performance.
KHC 5-Year Return Details
| Start date: | 10/05/2021 |
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| End date: | 10/02/2026 | ||||
| Start price/share: | $37.07 | ||||
| End price/share: | $22.19 | ||||
| Starting shares: | 269.76 | ||||
| Ending shares: | 346.67 | ||||
| Dividends reinvested/share: | $8.00 | ||||
| Total return: | -23.07% | ||||
| Average annual return: | -5.12% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $7,691.28 | ||||
The result is straightforward: a $10,000 investment in Kraft Heinz in October 2021 would be worth $7,691.28 by 10/02/2026, assuming dividends were reinvested. That equates to a total return of -23.07% and an annualized return of -5.12%. These figures were computed using the Dividend Channel DRIP Returns Calculator.
What Drove the Negative Return?
The primary driver was share-price weakness. Kraft Heinz fell from $37.07 to $22.19 over the period, a decline large enough to outweigh the benefit of dividend income. That distinction matters because headline yield can mask weak underlying equity returns. In this case, reinvested dividends softened the loss, but did not reverse it.
The numbers make that clear. An initial investment of 269.76 shares grew to 346.67 shares through dividend reinvestment, reflecting the compounding effect of distributions paid over time. Yet because the ending share price was materially lower, the larger share count still translated into a smaller portfolio value than the original investment.
How Dividend Reinvestment Changed the Outcome
Over the five-year period examined here, Kraft Heinz paid $8.00 per share in dividends, with those cash payments assumed to be reinvested on each ex-dividend date at the closing price. Reinvestment is an important part of total-return analysis because it captures how income can accumulate additional shares, particularly when a stock price is under pressure.
For dividend-paying stocks, total return differs from price return in one critical way:
- Price return measures only the change in the stock price.
- Total return includes both price change and dividends, assuming the dividends are either taken in cash or reinvested.
- Reinvested dividends can improve long-term outcomes, but they do not eliminate the risk of capital loss.
Kraft Heinz is a useful example of that last point. The dividend stream added meaningful value, but the stock’s decline was substantial enough that total return remained negative.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.60 per share, KHC has a current yield of approximately 7.21% using the ending share price of $22.19. That is the forward-looking cash yield implied by the latest annualized payout rate.
It is also possible to calculate yield on cost by comparing that same $1.60 annualized dividend to the original purchase price of $37.07 per share. On that basis, yield on cost is about 4.32%.
Yield on cost can be a helpful reference point for understanding how an income stream relates to the initial entry price, but it does not change the market value of the investment or the return available from holding the stock going forward. Current yield, valuation, balance-sheet flexibility, and operating performance remain more relevant to prospective return expectations.
Key Takeaways From the Kraft Heinz Example
- A $10,000 investment in Kraft Heinz in October 2021 would have declined to $7,691.28 by early October 2026 with dividends reinvested.
- The stock’s share-price decline was the main reason total return was negative.
- Dividend reinvestment increased the share count meaningfully, but not enough to offset the drop in the stock price.
- A high dividend yield should be evaluated alongside business fundamentals and capital preservation.
For long-term investors, the main lesson is that income matters, but total return matters more. A stock can deliver substantial cash distributions and still produce a disappointing outcome if the market steadily marks down the underlying business.
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” — Warren Buffett
