Metrics & Fundamentals

Key Metrics for Long-Term Investors — 5Y Return, Yield & PEG

A quick overview of essential long-term investing metrics and how to use them.

• 2 min read
A price trend arrow with a 5Y label alongside and a dollar icon below, representing long-term investment metrics

In the world of investing, it’s crucial not to get caught up in short-term market swings. Making sound decisions requires focusing on long-term financial indicators that reveal a company’s or fund’s actual performance over time, beyond temporary spikes or drops. In this article, we’ll explore key metrics that help investors assess potential and make more confident investment choices.

5Y Average Return

This metric measures the average annual total return (price change + reinvested dividends) over the past five years. It’s like a bank’s annual interest rate, but for your fund.

Example:

If an ETF grew from $100 to $161 in five years, that equals roughly +10% per year → 5Y Avg Return = 10.0%

Two people holding onto an upward-trending price chart (arrow), with a clock between them and falling coins around, symbolizing long-term investment

5Y Average Dividend Yield

Shows the average annual dividend yield paid by a company or fund over the past five years. For example, if a stock has paid about 1.5% each year, then 5Y Avg Dividend Yield = 1.5%. This metric helps income-focused investors assess the consistency and reliability of income.

If you’re investing for passive income, stable dividend payouts can be just as important as price growth. For example, retirees or those seeking regular cash flow often prefer companies and funds with reliable yields. However, very high yields can sometimes signal riskier companies — always check if the dividend is sustainable.

PEG Ratio (5-Year Expected)

The PEG Ratio tells you if a company’s price is reasonable compared to its expected earnings growth.

Formula: PEG = Forward P/E ÷ 5Y Expected EPS Growth Rate (expressed as a whole number, not a percentage; e.g., use 15 for 15%)

Example:

  • Forward P/E = 30
  • EPS Growth (5Y expected) = 15%

PEG = 30 ÷ 15 = 2.0

Interpretation:

  • PEG < 1.0 → possibly undervalued
  • PEG ≈ 1.0 → fairly valued
  • PEG > 1.0 → potentially overvalued

FinImpulse Insight

Use long-term metrics to see beyond short-term volatility and make more informed investment decisions. But still remember — No metric tells the whole story. High past returns don’t guarantee future results — and a ‘good’ PEG or yield should always be considered in the context of the company’s business model, industry trends, and your own risk tolerance. Utilize these metrics as part of a comprehensive, diversified strategy.

We provide the data — you decide what’s right.