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— Warren Buffett

A five-year buy-and-hold investment in Target Corp (NYSE: TGT) produced a negative total return over the period reviewed here, even after accounting for dividend reinvestment. Using a starting investment date of 11/12/2021, a hypothetical $10,000 position declined to $7,366.41 by 11/11/2026. That outcome highlights a central point in long-term equity analysis: dividends can cushion weak price performance, but they do not fully offset a large contraction in the share price.

TGT 5-Year Return Details

TGT 5-Year Return Details
Start date:	11/12/2021	$10,000 11/12/2021   $7,366 11/11/2026
End date:	11/11/2026
Start price/share:	$260.02
End price/share:	$162.70
Starting shares:	38.46
Ending shares:	45.29
Dividends reinvested/share:	$22.78
Total return:	-26.32%
Average annual return:	-5.93%
Starting investment:	$10,000.00
Ending investment:	$7,366.41

The five-year holding period was unfavorable for shareholders who entered at that starting point. A total return of -26.32% means a quarter of the original capital was lost despite ongoing cash distributions from the company. On an annualized basis, the result equates to -5.93%, which is a more useful measure for comparing this investment with other assets or with alternative holding periods.

These figures were computed using the Dividend Channel DRIP Returns Calculator, assuming dividends were reinvested on the closing price at the ex-dividend date.

What Drove the Negative Total Return?

The principal driver was the decline in Target’s share price. The stock fell from $260.02 to $162.70 over the period, a drop large enough to outweigh the benefit of reinvested dividends. That distinction matters because total return has two components:

• Capital appreciation or depreciation: the change in the stock price over time.
• Income: dividends received, whether taken in cash or reinvested into additional shares.

In this case, dividend reinvestment increased the share count from 38.46 shares to 45.29 shares. That is a meaningful accumulation effect. However, owning more shares does not guarantee a positive outcome if those shares are worth substantially less than the original purchase price.

The Role of Dividends in Target’s 5-Year Return

Target paid a cumulative $22.78 per share in dividends during the holding period. That cash flow provided a partial offset to price weakness and illustrates why total return analysis is more informative than looking at price performance alone.

For dividend-paying stocks, reinvestment can materially affect long-term results because each distribution purchases additional shares, which can then generate further dividends. The effect is especially powerful when valuations are stable or rising. When the underlying share price is under pressure, however, the reinvestment mechanism can soften losses without necessarily reversing them.

Current Yield and Yield on Cost

Based on the most recent annualized dividend rate of $4.64 per share, TGT has a current yield of approximately 2.85% using the ending share price shown above. A related measure, yield on cost, compares that same annual dividend rate with the original purchase price of $260.02 per share. On that basis, the yield on cost is about 1.10%.

These two metrics answer different questions:

• Current yield measures the income rate available at the stock’s current market price.
• Yield on cost measures the current income stream relative to the original entry price.

Yield on cost can be useful for evaluating how an income stream has evolved over time, but it does not change the market value of the investment today. For portfolio decisions, current yield and forward cash-flow expectations are generally more relevant than historical cost alone.

Key Takeaways From This 5-Year Buy-and-Hold Example

• A $10,000 investment in Target on 11/12/2021 declined to $7,366.41 by 11/11/2026.
• The total return was -26.32%, or -5.93% annualized.
• Dividends increased the share count from 38.46 to 45.29 shares through reinvestment.
• Total dividends of $22.78 per share helped offset, but did not overcome, the share price decline.
• The case underscores the importance of evaluating both valuation at entry and total return, not dividend yield in isolation.

Long holding periods can be powerful, but they do not eliminate entry-price risk. Even established dividend payers can generate weak multi-year returns if purchased at elevated valuations or if operating expectations reset lower during the holding period.

Another investment maxim worth keeping in mind:
“The four most dangerous words in investing are: ‘this time it’s different.'” — Sir John Templeton