“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 bank stock has delivered returns through both price appreciation and income. For Fifth Third Bancorp (NYSE: FITB), a buy-and-hold investment initiated in October 2021 and held through October 2026 produced a positive total return, with dividends reinvested adding meaningfully to the ending value.
Using the figures below, a $10,000 investment in FITB grew to $14,059.63 over the period. That equates to a 40.62% total return, or 7.06% annualized. The result illustrates a central feature of long-term bank stock investing: a substantial share of the outcome can come from dividend income and the compounding effect of reinvestment, not just from the change in the share price.
FITB 5-Year Return Details
| Start date: | 10/11/2021 |
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| End date: | 10/08/2026 | ||||
| Start price/share: | $43.49 | ||||
| End price/share: | $50.70 | ||||
| Starting shares: | 229.94 | ||||
| Ending shares: | 277.36 | ||||
| Dividends reinvested/share: | $7.12 | ||||
| Total return: | 40.62% | ||||
| Average annual return: | 7.06% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,059.63 | ||||
The share price itself rose from $43.49 to $50.70 over the period, a gain of roughly 16.6%. The difference between that price gain and the 40.62% total return is largely explained by dividends and the additional shares acquired through reinvestment. Starting with 229.94 shares, the position grew to 277.36 shares by the end of the period, underscoring how dividend reinvestment can materially increase exposure over time.
These figures were computed using the Dividend Channel DRIP Returns Calculator, with reinvestment assumed at the closing price on each dividend ex-date.
What Drove the FITB Total Return?
For a regional bank such as Fifth Third Bancorp, five-year returns typically reflect three main variables:
- Share price change: the market’s view of earnings power, credit quality, and valuation.
- Dividend income: recurring cash distributions that can represent a significant portion of total return.
- Reinvestment effect: dividends used to purchase additional shares, which can compound future income and gains.
In this case, the income component was substantial. Over the holding period, Fifth Third Bancorp paid $7.12 per share in cumulative dividends that were assumed to be reinvested. That helps explain why the ending share count rose by more than 20% even though no additional outside capital was contributed.
Dividend Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.68 per share, FITB’s current yield works out to approximately 3.31% using the ending share price of $50.70.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price. Using the starting price of $43.49 per share, the $1.68 annualized dividend implies a yield on cost of about 3.86%.
Yield on cost is best viewed as a way to track income growth relative to the original entry price. It does not describe the return available to a new buyer at today’s market price, but it can help show how a long-term dividend position evolves as payouts accumulate or rise over time.
Key Takeaways From This 5-Year Holding Period
- $10,000 became $14,059.63 over five years with dividends reinvested.
- Total return was 40.62%, equivalent to 7.06% annualized.
- Price appreciation alone did not account for the full result; dividends were a major contributor.
- Reinvestment increased the share count from 229.94 to 277.36, strengthening the compounding effect.
For dividend-paying bank stocks, that distinction between price return and total return is critical. Looking only at the chart can understate what a disciplined holding period actually produced.
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” — George Soros
